Inflation Bites Chunk out of Personal Income & Spending

Paying even more to get even less. Exactly what American consumers need the most in these trying times.

By Wolf Richter for WOLF STREET.

So we’ve got a little situation here. We’ve got a little bitty inflation uptick, I mean the worst inflation spike in three decades, and now total personal income from all sources, including from the now fading free-money-from-the-sky stimmies, rose 0.5% in April compared to April a year ago; but adjusted for inflation, “real personal income,” fell 3.0% year-over-year, according to the Bureau of Economic Analysis on Friday.

Month-over-month, and not adjusted for inflation, personal income from all sources plunged 13% in April from March to a seasonally adjusted annual rate of $21.2 trillion – after having spiked by 21% in March for a stimmie-powered historic WTF moment. Every one of the three waves of stimmies triggered a glorious overshoot. So going forward, most of those stimmies have been received and accounted for.

I indicated the 0.5% year-over-year increase in total personal income from all sources, not adjusted for inflation, with the upward-sloping green line. In a moment, we’ll get to what that green line looks like adjusted for inflation.

Personal income just from wages and salaries, not adjusted for inflation, rose 1.0% in April, from March, and will likely increase further in May, as more consumers re-enter the workforce and as employers raise wages in order to attract these people back into the workforce, in what is one of the weirdest labor markets ever, with record job openings, while 16 million people are still claiming state or federal unemployment compensation.

But then there’s inflation, and thereby the erosion of the purchasing power of “real” personal income. Total “real” personal income from all sources — adjusted for inflation and expressed in chained 2012 dollars – according to the Bureau of Economic Analysis, fell by 3.0% year-over-year – hence the downward-sloping green line:

Yup, inflation – the decline of the purchasing power of the dollar, and thereby the decline of the purchasing power of labor – is exactly what the American consumer needs the most in these trying times.

Nevertheless, American consumers gave their darndest to hold up the global economy. In March, consumer spending on durable and nondurable goods had performed a stimmie-driven WTF spike of historic proportions, triggering record trade deficits as many of these goods or their components and materials are imported. But spending on services was still lagging woefully behind.

In April, some consumers still got their stimmies and spent them, and other consumers were spending the stimmies that they’d gotten in March, and overall spending in April held up near the WTF level in March. But what we’re now seeing too is the impact of inflation.

March and April were the first two months back-to-back in three decades where large-scale inflation has cropped up in the data. So it’s time to see how that worked out.

“Real” spending on durable goods dropped by 0.9% in April from March. But not-adjusted for inflation, it rose 0.5%. This includes the mega price increases in used and new vehicles.

“Real” spending on nondurable goods dropped 1.6% in April from March. Not-adjusted for inflation, it dropped 1.3%.

“Real” spending on services ticked up 0.6% in April from March. But not-adjusted for inflation, it rose 1.1%. While spending on goods has spiked to historic highs, spending on services – from airline tickets and hotel bookings to rent – has lagged behind. In April, real spending on services was about where it had been in late 2017.

In total, “real” consumer spending on all goods and services fell 0.1%, but not-adjusted for inflation, it rose 0.5%. You get the drift. Consumers spent even more money to get even less for it:

Everyone now has their own laundry list of goods and services that have suddenly gotten a lot more expensive, or where the price stayed the same, but the goods have gotten smaller or the quality was lowered, or a combination. Astute consumers have been reporting this for months, but in March and April, it started to seriously show up in the data.

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  400 comments for “Inflation Bites Chunk out of Personal Income & Spending

  1. Trucker guy says:

    Just a waiting game at this point. Lot of ink being spilled right now but the only thing to do is twiddle your thumbs and look shiftily around the room as the walls close in. If you’re already in the game and didn’t leverage yourself like everyone else with new toys or crapola stocks/buttcoins then you’ll weather the storm well. Meanwhile people who buried themselves in debt and crappy assets like overblown housing and a 9 year loan on a 70k dollar pickup truck only have runaway inflation to save them which will destroy them in the long term anyways or young people like me who would have been set up to be debt free aside from a mortgage seeing themselves and their pathetic salary and down payment dissolve as the days go by from “transitory” inflation that a bunch of crooks promise won’t hurt them.

    Can only hope the whole thing goes up in smoke and the blue collar folks who are financially responsible can get back in at some point. It’s all wait and see. And I’m tired of waiting in a 1br apartment that costs me 1800 a month where I can’t sleep because of noisy families and their wild kids. If otr trucking wasn’t so unbelievably awful I’d go back to just living in a truck and working nearly everyday a year. But who wants to do that when all the money you saved from doing that before means diddly due to “temporary inflation.”

    • Phoenix_Ikki says:

      The saying goes we are all dead in the long run anyway and we are all condition to think very short term in this country. You drill the new normal narrative into the public even if they don’t like it, most will except it that’s just the way . Just suck it up and just shut up and take my money.

      • 2banana says:

        This is the new narrative.

        “The faster than expected increase in some of those prices is actually a good sign in the sense that it’s a sign that the economy is recovering faster than a lot of people expected…”

        — White House National Economic Council Deputy Director Bharat Ramamurti on May 28, 2021.

        • CRV says:

          I just discussed that yesterday. Rising prices do not indicate a recovering, let alone a growing economy. Spending more for less is not growth, it’s shrinkage. Less is produced or delivered as a service at higher costs. Consumers get less for their currency. No matter how economists try to spin it, that’s no improvement in my book.
          Those gov economist have all the same mindset. Lie ’till someone takes over. They know most people will not think for themselves anyway.

        • Winston says:

          “Rising prices do not indicate a recovering, let alone a growing economy.”

          Consider the source of the ridiculous claim:

          “Bharat Ramamurti is an American attorney and political advisor who is serving as a member of the COVID-19 Congressional Oversight Commission, a congressional oversight body tasked with overseeing the Department of the Treasury’s and the Federal Reserve Board’s management of stimulus and loan programs mandated by the CARES Act. In 2020, he was chosen to serve as Deputy Director of the National Economic Council.”

        • Educated but Poor Millenial says:

          The price increase is not because of increasing demand , it is because our supply chain is disfunctional, such as lumber supply, chip shortage problem,etc, these are showing that the prices economy has huge problem, Mr. Baharat is don’t listen to him no matter of he is Director of some organization

      • Joe Saba says:

        thank you I will
        got 45 days to put out notice of 10% rent increase
        don’t care if you’re retired and living on fake cpi fixed income

    • K says:

      The people getting hurt by the inflation are the less wealthy, 95% of Americans, whose wages, savings, pension payments, social security payments, CDs, and other dollar-tied holdings are being drastically reduced by inflation. That inflation is being fostered by the creation of over $2 TRILLION since 2019 (PLUS $40 billion more a month for months in 2021 until today) by the “Fed” to gift to its banksters in exchange for their garbage, uncollectible, mortgage-backed-securities, which are probably suffering HUGE defaults.

      In other words, a huge part of inflation for decades has been due to the current and prior TRILLION dollar bailouts for decades of free money given by their “Federal” Reserve to the banksters. Those are the true “dependents” on most government handouts: the corrupt ultra rich. See Simon Johnson’s “The Quiet Coup” in The Atlantic Magazine.

      Also, do not count on all Americans being able to survive. Remember that almost half of Americans (before all of this orgy of money creation by the “Fed”) could not even afford an emergency $400 expense. They were living from day to day in 2919 and often, only by getting paycheck loans at ludicrously high interest rates (counting the huge service fees as a percentage of their tiny paychecks.) See “40% of Americans don’t have $400 in the bank for emergency expenses: Federal Reserve” in CNBC and ABC news.

      That has only worsened due to the inflation. Loss of their jobs, even if they later got them back, also put millions in the hole, so they have even less net capital or have nothing but huge debts: due to the business closures, they now owe gigantic rent arrearages and mortgage arrearages.

      More business closures are coming which will hurt most the majority of less wealthy Americans: increase their debts and decrease their income. Keep in mind that most of the younger generations are in that position. The opportunities for them dried up because of the banksters’ actions.

      The cherry on top is that the costs of what they need, food, housing, education, and medical care are the ones mostly rising. The banksters really ripped off the younger generations, which harm will “trickle down” to those generations’ children, because younger generations will not have the funds to help their even younger children.

      The only “trickle down” that actually exists in economics is the trickle down that we are seeing of misery and generations living in poverty with few opportunities. Schools that get government funding turn around and charge such high tuition costs that only the wealthiest (e.g., corrupt banksters) can afford to attend them now.

      Others face getting so deeply into debt to get an education that they may never be able to pay down their student loans: I know various professionals who have been in such financial holes their whole lives. Financial parasites have done their best to use their “Federal” Reserve to suck the wealth out of all Americans for too long.

    • Miatadon says:

      For a young person, you are wise.

    • Song of the Dao says:

      So you touched on some points which reveal the real source of inflation.

      You know, there is no reason to PRINT money if a certain .1% were not HOARDING money (Bezos, Gates, Buffet, Musk). If wealth were distributed more evenly there would never be inflation because we would not need stimulus, etc.

      Only taxes that cure the hoarding of wealth will cure inflation.

      • Jeremy Wolff says:

        but but but the hoarded money is being invested in companies, or buying bonds that were issued by companies to make investments… surely those companies are hiring workers which helps the common man.

        • Corporate America used the pandemic to automate more jobs. When a retailer installs four self service checkout machines, they need one cashier to oversee them, and that person works twice as hard as they used to.

        • Robert says:

          Although capital expenditures appear to be rising, the negative current account for the US suggests these investments are being made in foreign goods and services.

          I would think capex would rise as the dollar falls in value, so I’m not sure what to make of capex vs current account at this point.

          see for current-account data.

          and for capex data.

        • Apple says:

          Those self service checkout machines were a little too convenient at my local Walmart and they removed them.

        • Max Power says:

          @Apple – I think it depends on the Wal Mart. At one store I was in recently (Fla.) they just finished roughly quadrupling the number of self service registers whereby now they have almost no regular registers left. The new self service registers they are using have been redesigned with more space to hold the scanned merchandise (and also more space to move about generally).

        • Robert Hughes says:

          Ditto Palm Desert, CA, what was about 24 serviced check outs now down to 4. Must say the new layout is much faster with more room, portable scanner, ect., but as noted requires many less employees.

          See this same application at HD, much better. Lowes staying with original system which is slow and tedious, falling behind.

          Wonder in desert given level of educational achievement and various other factors whether WM, HD, LOW, others have a hard time filling these very low skilled jobs and that is part of the reason for the switch. My experience is those employees watching over the self check are way more capable when you need assistance with an item, bad or missing sku, etc.

        • economicminor says:

          It’s the game of Monopoly.. Collect all the pieces and raise the rents until all your opponents are wiped out.

          In the real world version there are lots of bribes and pay offs and politicians and corruption but it is the same game you played as a kid.

      • Jdog says:

        Inflation is not caused by hoarding money, it is caused by buying on credit. Every time a person buys something using credit, the money to facilitate that transaction is created right when they swipe their card.
        Taxes do not cure inflation, curtailing credit does. Had you been around during the 80’s you would know that…

        • Thomas Roberts says:

          ^ This ^

          Hoarding money is the opposite of inflation as that would imply low money velocity. Greatly expanding the money supply whether through credit or FED actions causes inflation.

          Alot, probably most of current inflation though, is caused by shortages, monopolistic behavior, reckless investment, supply+demand, and price gouging; all of the stimulus money and easy credit is definitely apart of it as well. This all applies pre-pandemic as well.

        • Jdog says:

          You are way overthinking this. Inflation is simple, it is when the supply of money outpaces the supply of goods and service.
          But what is causing the oversupply of money that is the question?
          It is, and always has been credit. Credit creates money from thin air. In addition, it inflates the price of the credit purchased item by the amount of interest paid on that purchase..
          For those of you who think the FED creates inflation by printing, then you must explain the mechanism by which that printed money gets into the economy. Until just this past year, helicopter money did not exist, and yet inflation did.
          There is a direct correlation between inflation, and the use of credit. The only time when inflation outpaces credit expansion is when frontrunning begins as it did in the 1970’s and becomes a “built in” mechanism in itself due to price increases based on anticipation of inflation.

      • Rubicon says:

        Good point, Song of the Dao.
        The renowned economist, Dr. Michael Hudson defines this current issue in the US as “DEBT DEFLATION.”

        Meaning, that wages have NOT increased in the last 40 years for average citizens. Millions of low wage earners were offered easy credit from banks/others to make up for the miserable wages.

        So average citizens are experiencing a kind of “inflation” whereby those millions are heavily in debt, with stagnant waves.

        Thank all those banks/others who make billions off of these debts.
        No wonder the society is beginning to collapse.

        • rhodium says:

          In 20 years real personal median income is supposedly up 12%. Real GDP is supposedly up 50%, and real GDP per capita is 26%. Meanwhile if you look up the TCMDO on FRED for total securities, loans and liabilities, then inflation adjust that, it’s up 100%.

          Regardless of what inflation numbers you use to adjust the numbers, the relative increases tell you a few things. Mainly that most economic gains are going to the top (or if you believe inflation is understated that they’re taking it away from us zero sum style). Also, the system is becoming ever more leveraged as debt never ceases to balloon upward faster than incomes. Debt is the reason the Fed can’t raise rates. Debt is part of the reason they are blowing money out trying to spur inflation.

          Who wants to bet wages won’t rise fast enough to drive inflation faster than debt growth? Or do they think stagflation fixes overleveraged economies? Boy, if Powell came out and said that… Well if QE showed us something between 2009 and 2020, it’s that it made no apparent difference to the growth of total system leverage (remember this is how the money supply gets expanded, and you can look at total bank deposits to be reminded of this), so sooner or later we’ll still have to face a reckoning.

      • nodecentrepublicansleft says:

        Don’t worry, be happy!! It will TRICKLE DOWN!!!

        hahahahahahahahahaha!!!!! Wheeeeee!!!!

        A nation of suckers going for a ride!!!! Wheeeee!!!!

        I’m reading People magazine while I watch TMZ….

      • K says:

        Amen. Taxation on the richest Americans is the only thing that can fix our country’s massive inequality and take back the trillions taken by the ultra rich. We must index taxation to a person’s total wealth, including hidden wealth, because it would not be fair if a person who earns $50 million a year and owns little else pays as much as a trillionaire who hides everything via foreign trusts and companies except for earnings of $40 million from one company.

        Hike estate, gift, and generation-skipping taxes (which have frequently not even been enforced by the IRS) to the sky and fund the IRS adequately to collect the trillions in taxes in hidden, foreign trusts and companies that have never been paid. Watch “Britain’s Second Empire: The Spider’s Web” even though its estimation that only $55 trillion is being hidden is a gross under-estimation.

        Note that I am not advocating anything other than fairness: that the trillionaires and billionaires finally be forced to pay their fair share of taxes, not continue to skate by avoiding taxes. Search Apple, tax avoidance, and $40 billion to understand a tiny portion of the problem.

    • David Hall says:

      New housing starts surged in March to the highest level since 2006. The Great Recession that followed the 2006 spike in new construction was triggered by housing speculation. In April the pace of new housing starts diminished compared to March due to shortages, except new multifamily apartment and condo starts increased. Zoning regulations limit the building of multifamily housing to certain areas.

      My brother won with an all cash bid on a house that received multiple offers. He and his wife are not rushing to sell their other house as prices are in a strong uptrend.

      • David G LA says:

        Until they aren’t. Me – I’d take the money and run.

        • David Hall says:

          I talked to my brother yesterday. He put his house on the market a few days ago and accepted an offer above his real estate agent’s suggested price. They have a $60k deposit and scheduled closing date.

      • Eugebe says:

        They will be forced to sell because the peoperty taxes rise next year by 20% at least.

      • Lisa says:

        Your brother must be rich.

    • Paulo says:

      Good comment T Guy. It seems to be a realistic assessment. As a 65 year old the only addition I would make is that what we see today will not always be this way. Things change. Can they get worse? You bet. The amount of debt being added to the daily narrative scares me, to be honest. I look at increasing debt (day in and day out) as an accelerant to collapse if this doesn’t change. However, in the past it seems the only belt tightening we see is at the bottom end for workers and everyday people. If ‘they’ pull out this solution I don’t think people will put up with it anymore. There’s already mass shootings every day or two. What the hell will happen if things really go sideways?

      • lisa2020 says:

        Thoma you are absolutely right. Who owns who is the root of all of IT. Who has any rights really complicates the big picture in the real world.

      • rhodium says:

        Ah yes, feminism. The cause of lead in the water, Jerome Powell’s RBF mugshot, stagnant wages, inflation and a housing bubble. Particularly it makes sense that women not having children would cause a housing bubble.

        There is one solution to this problem, and it’s a very good one. Thomas Roberts should crawl back into the hole under his favorite rock and try to get over his divorce. Meanwhile the rest of us can have a serious discussion.

      • Anthony A. says:

        No need to worry, Thomas, I am IN CHARGE in my house. And after two divorces, I have this stuff down pat. /s

      • Thomas Roberts says:


        Housing bubbles are caused by many things such as government policies and over demand for certain areas. Over demand for certain areas can be itself caused by many things such as government policies.

        Government policies over the last decades have been caused by one gender far more than the other. If certain policies get passed, other ones are allowed to slide by. One gender in effect, entirely controls the media and makes up majority of votes at all times. Certain movements have leaders who actively lie and lead many, if not most of their followers to ruin.

        A certain women’s movement has greatly changed the basic ways society interacts and that changes everything else.

        And rhodium, it’s very brave to insullt someone anonymously online. Shows your strong intelligent character. FYI, I’m not divorced.

      • Zantetsu says:

        Sorry I have to ask, although I kind of don’t want to. Can you be more specific about what this “women’s movement” you are describing is?

      • Thomas Roberts says:


        It sounds ridiculous at first, I know, that it’s at the root of most western problems; but once you really hear everything about it, how it operates, and it’s effects. You will actually have a clear understanding of why America and other western countries are doing things the way they are. Once, you fully consider it’s effects and you combine that with the Financial/economic/political side of things, everything going on in America today, will make complete sense.

        There is limitless evidence backing this up. For a start, you can find online the social media influencers that most young girls, including kids listen to and hear what they have to say about how young girls should live their lives. The majority of all girls in their teens and 20s are listening to these “influencers” on a regular basis.

      • c_heale says:

        All the ills of the world are caused be feminism???!!!!

        What about the class system, neoliberalism, organised religion, greed, etc.

        Imo most of the ills are caused by industrialization.

    • kam says:

      If its got teats, tracks, or tires, it’s going to cost you.
      Learn basic carpentry, house wiring, plumbing, how to run a small excavator. Build your own home. Level, square and a the rule of 3/4/5.
      There is no greater tax-free investment than sweat equity and you need a place to live anyway.

      • Cas127 says:

        “Learn basic carpentry, house wiring, plumbing, how to run a small excavator. Build your own home. Level, square and a the rule of 3/4/5.”

        Any thoughts on the best places to learn these skills most efficiently (books, youtube, community college? Where do you go to get excavator practice? What certifications are available?)

        • Tom Pfotzer says:


          Re: excavator or grading learning curve:

          1. Get a piece of land and a grading project. Pond, driveway, leveling a pad for a greenhouse, equipment shed.

          2. Do an have-now and to-be grading plan. How much dirt do you need to move from place A to place B (“cuts and fills”). If you can’t eye-ball it, buy yourself a cheap laser-level and a tall measuring stick to calc how much dirt you have to move

          3. Rent a track-loader, or if the project is small, a skid loader on tracks. Get the damage waiver. Get the delivery-truck driver to give you a 10 minute tutorial. That’s all I ever got.

          4. Pick the place to start pushing dirt. Start at high elevations, and move the dirt to the lowers. Start somewhere where there’s nothing you can damage, and you can’t tip the machine over

          5. Spend about a half day getting good at setting the blade depth low enough to move dirt, and high enough not to stall

          6. Spend another half day un-doing the first day’s screw-ups

          7. At mid-point day 2, if you have any hand-eye coordination at all, you’re productive

          8. After 1-7, you’ve got enough skill and confidence to be productive.

          A decent machine costs somewhere between $4-500 a day, plus $200 or so round-trip transport. Fuel is < $50 day.

          For plumbing and wiring, there's plenty books and YT vids. It's not hard.

          Wiring. Start at your house's entry point of power wiring. Pop the cover on your load center (breaker box) (after turn off main breaker, of course) and take the time to understand what each and every wire does. Everything in there is there for a reason, and it's the single point where all the parts tie together.

          Then (while power's off) open up a switch box (unscrew the cover and look inside) and a plug box. Look at the colors of the wires, where they're connected on the switch/plug, and make the mental connection to what you saw in the main breaker box. What does black, red, white, green wire do? Once you've got that conceptually, you're most of the way there. The rest is "what device do I need to get X job done". Bring a project plan (wire a new light circuit and outlet for the dark corner of my basement) to your local elec supply house, and ask them to give ya what ya need. It's what they're paid to do.

          Plumbing is two main things: supply of water, and drain of waste-water.

          ID the main supply-side components – pipe, elbow, T, valve, check-valve, etc. – and learn how to join them. Soldering. It's cake after the first 2 screw-ups. Home depot / Lowes/ Menards plumbing aisle is your one-stop learn-shop.

          Drains: make sure the drains slope down so gravity works (exhausts waste water to lowest point of exit @ your house), and learn about PVC. Go to home depot, look at their PVC plumbing aisle (valves, elbows, Ts, pipe, pipe-cement/glue) and bring a project diagram with you. Ask the salesperson to "I wanna put a new sink in my basement, and connect it to the existing drain system. What do I need, and how does it all fit together?".

          HD "helps doers do more", or so they say. Put 'em to the test.

          Reading is OK, but doing a test project with low-cost-of-failure is the way to get there fast.

        • Trucker guy says:

          Problem with a lot of trades is the boom and bust cycle of construction I’ve know framers who are sending their kids to yuppie private schools and living in mansions for a few years and are building fences and dog houses for 10 dollars an hour to scrape by. Right now in northern Idaho motor grader operators are clearing 30+ dollars an hour but for how long? I’ve seen people offering me jobs on indeed to run heavy equipment around SLC for 45 dollars an hour at times. But I doubt it will last. Some trades are a lot more stable than others. I always had a job machining or welding. Same with trucking. Heavy equipment, grading, logging, and construction not so much. Bid falls through, contractor runs out of money, whatever it was always something. When the getting’s good, boy is it good for a roughneck with no degree. When it slows, it is alcoholism, divorce and hoping from one rental to the next. Not so much my personal experience just what I’ve seen to boys around me. It’s the same old cycle too, right now a lot of guys back home are living high on the hog with new diesel “work” pickups without a scratch on them pulling boats or RVs and taking up 4 parking spots at the bars on the weekend. Saw it as a burgeoning teenager after 2009 when it all withered away.

          You’re selling yourself short though in my opinion. This whole new paradigm of transitory this and no collapse that and permanent fed fixers… Eh, I don’t buy it. Everyone says it’s different this time but nobody says why it’s different other than we don’t have a subprime loan crisis and lending standards are “better” and this is just some global pandemic induced issues that will clear once we have herd immunity. The economy looked like it was on crackling ice before covid happened and I remember sitting in a bank with the teller saying I should close out money market savings accounts and open one of their weird trading deals that she couldn’t explain and I was expecting a crash in 2019. She was right up to and including now but I’m skeptical. Trump fueled the economy because he had nothing else to run on but for chants and the Facebooking numb-butt crowd. Biden doesn’t want to be Trump’s bag holder and the fed have painted themselves into a corner. We’ve cut taxes on the rich, passed some of it onto the middle class and gave the money printers a shot of nitrous and rained free money into the hands of the American people to the point of labor shortages. And somehow we can all sit around calmly knowing that nothing bad is going to come from any of this?

          I’ll take my union job with amazing benefits that can’t hire anyone because we pay a couple bucks less an hour and set myself up for the long run rather than chase the last extra penny in wages working for slave drivers that will cut me loose the second things turn down. People are so short sighted. I’m betting on a crash and one of larger proportions than 08. Might be wrong, but if I am, I won’t lose as much as most other working class. And if it gets so bad that joe-blow can’t afford ramen while I eat walmart tv dinners, the ensuing riots in the streets will be far more important anyways.

          The nature of capitalism is boom and bust cycles. I don’t think we’ve fundamentally changed much of anything in a handful of months time and a worldwide flu that we already have a vaccine for. I don’t see a new normal firsthand and I don’t see an explanation for a new normal and I also don’t see anyone even defining what this new normal is other than a couple of foolish ideas like no more recessions and we can just all work from home in a cabin in the woods using Tesla brand satellites and Tesla brand solar panels. You can’t bullshit and bullshitter.

        • Jdog says:

          You rent one and use it. It is a lost skill called self taught….
          Certifications are worthless except in advertising…

        • Ralph Hiesey says:

          I built two, still living with wife in the last one, finished in 1987.

          Worked out great for me. Yes, a big project.

          As far as books: the best one I found: Modern Carpentry. Very straightforward. Very basic. Very clear. Tells how to do everything in great detail, starting from foundation up. My edition was 30 years ago. Hope it’s still as good as it was then.

          DO NOT use any book that claims their method is the latest thing, better than anybody else has ever managed to figure out except by the author who brags that their unique genius has greatly exceeded those dumb folks that have been building them for fifty years. I saw too many of these books.

          Things are done the way they are usually done for a reason.

        • VintageVNvet says:

          C10, and Tom,
          Wonderful synopsis/summary for those starting out… I just hope you will extend your obviously extensive knowledge into the web as much as you can stand to do.
          Taught Construction Technology classes at two side by each High Schools in CA many years ago, where I learned that ”most” of the drop outs were mostly bored,,, and got them to learn arithmetic and so forth with real live examples, and damn sure got them to understand they were NOT going to support a family with $10/hour wages,,, etc., etc.
          NOW a days, with the advent of UT videos, mostly ”right on”,,, I can and do hope most folks will figure out how to build their own house,,, as I have done several times with great benefit!
          Last time I was looking, admittedly a while ago,,, there was tons and tons of cheap land almost everywhere in USA other than the coastal areas.
          Good Luck and may the Great Spirits Bless all the ”young uns” going forward. ( Including the young ”boomers.” )

        • Icecreamman says:

          Contractors, electricians, plumbers all need help. Go to any site. If they’re framing. Start with that. Drywall? Watch them. Carry mud for them. Electrician. Drill holes for new construction to run wire. They’ll teach you. Roofing. They’ll hire you on spot. Exactly how I learned. Did flat work and concrete too. Then start building. Eventually got my contractors license. I’m out of the building game now. But what I learned? Priceless. Electrical? I’ve got friends in all the trades. Can’t figure it out? I take a picture of my problem and they tell me what to do. Best thing I ever did. Roofing was by far the most profitable for me. And the hardest. Good luck.

    • You mention OTR trucking, implying you’re not tied to a specific location. So why would you pay $1800 for a 1 bedroom apartment with noisy neighbors when you can relocate to some place where rents are a third of that?

      • Trucker guy says:

        I’m a local route driver in the northwest US. Used to live in a “low cost of living” area. The issue is areas like that are limited in well educated and advanced jobs. Blue collar stuff in those areas is a tight market because the labor is everywhere. Good old boys can be quite skilled with their hands and tools despite a lack of formal education. I’m no different I was poor and worked a lot of odd jobs from heavy equipment, welding, car repair, framing, etc to make some kind of money. But it’s simple supply and demand. Everyone around you can do all this stuff so labor market is inevitably tight. Wages are surpressed and a lot of those blue collar jobs are under the table for mom n pop type outfits. I’ve worked 80 hours a week Monday through Monday for 10 dollars an hour flat rate that I have to pay self employment taxes on with no way to write anything off. After 2 hours of commuting to the job site both ways I’d sleep maybe 4-5 hours and barely have time to eat. Lots of boys on those job sites were smoking meth to keep that kind of pace. It’s a rough life to lead. It’s not really a life either, you end up existing just to work like a slave. And will only have maybe 500 bucks at the end of the week to show for it; wells that just sucks. Otr trucking is the same, 90-95% turn over rates and only marginally more pay then that.

        So I moved to an area where skilled trades has a tighter labor market and suddenly I’m in a union job with amazing benefits, a pension if you can believe that, and more pay than I could have ever had before. The only issue with the whole ordeal is housing. Or even land for that matter as I could build something myself if necessary. The area I’m in has seen real estate jump 4-5 times since the bottom in 2013-2015. At least for the bottom end of the spectrum. Supposedly the multimillion dollar mcmansions aren’t inflated as badly go figure.

        • Cas127 says:

          “The only issue with the whole ordeal is housing. ”

          This is a very common dynamic…the best jobs being overly concentrated in a handful of mega metros with very overpriced residential real estate and punitive tax regimes.

          As Wolf as pointed out, the Covid diaspora away from such places should help to lower housing costs (even, in the long term, in the destination metros since they have much better land availability).

          This is why monthly rent surveys from Zumper, ApartmentList, etc are so valuable…they give a real time picture of where your money/labor can go furthest.

        • Pea Sea says:

          The “Covid diaspora” is over, and prices just kept going up in the cities that everyone was supposedly leaving.

        • Cas127 says:

          “prices just kept going up in the cities that everyone was supposedly leaving.”

          Factually inaccurate, per the surveys mentioned…just take a look.

          In the last month or two, there may have been some leveling off or slight bounce up, but yr over yr most of the highest cost mega metros have seen marked declines (altho they started at such insane nosebleed levels, such mega metros are *still* the most expensive…but just by $500 per month vs. Prior $1500).

          For me, the bigger issue is the 10%+ rent hikes in some dispersed destination metros…but hopefully those places’ lack of land constraints will lead to new building, lowering rents again over time.

        • lisa2020 says:

          Hey trucker guy- you’ve got your eyes open. You are surviving. And, you are doing it right on! Try to relocate with your union to another area where you have a chance to buy some property, but keep remembering that long term horizon is what counts to survive. I was able to do it twice, with bonuses.

    • Jon says:

      I have been an astute observer of market and I can tell you buying because of FOMO is never good
      It pays to have patience but not everyone has in them to be patient.

      I also see long term deflationary trend

      • yxd0018 says:

        I don’t know if last 20year FED experiment shows deflation is impossible, what else can show you. 50T or 100T debt?

        • Jdog says:

          If you think 20yrs indicates a historical perspective, you need to study history…

      • historicus says:

        “I also see long term deflationary trend”

        in housing maybe..
        but a halt to inflation, or a retracement of inflation, is not Deflation.
        Who has ever seen deflation other than Big Foot?
        The scare era of deflation….2009 to 2020…..CPI went from 214 to 254 …about 17% …wow, that was close.

    • MyLadyHumps says:

      You state the facts, unfortunately this is how the game is being played. The game is rigged. Your choice is to soldier on and hope you get lucky (ala the next GME, BTC…) or quit the game.

      The Fed can print money but they can’t print wealth so those who do productive work must support those who are given conjured money for doing nothing.

      The working class are left with the monumental task of supporting an ever growing army of government bureaucrats, an underclass who can’t or won’t work and the growing investor class who charge you $1800/month for your crappy apartment.

      As more people become disillusioned and drop out of the productive work force the ones who are left to soldier on carry a larger burden and their voice is silenced at the voting booth as politician bribe a growing class of do-nothings with free money.

      I’m a US citizen but I’m not a resident so I can’t vote and at this point I don’t care because opposing a tidal wave of free loaders is like bailing the ocean with a thimble.

    • NickL says:

      Poor you having to suffer in a one bedroom apartment that costs $1800 a month (which is cheap and below market in the NYC area)… Its only recently that a 3000 sq ft house for a couple with no kids is the new normal in a 90 / 6 town (90% + white, six figure average income).
      BTW, you forgot monthly auto insurance for that ‘$70K pickup truck with the 9 year loan’
      Prices for EVERYTHING now are crazy but people ARE paying them. remember it is due to EASY CREDIT and millenials who are just a cookie cutter of one another

      • c_heale says:

        Nice to criticize millennials who are in a terrible situation due to the generations before them being greedy.

      • Cash Guy says:

        “Its only recently that a 3000 sq ft house for a couple with no kids is the new normal in a 90 / 6 town (90% + white, six figure average income).”

        That’s exactly us. Except we have a (single) kid and the house is more than 3000 sq ft. I wouldn’t trade my white, high income neighborhood for any of those high crime cities

    • Old School says:

      One possibility is that due to excessive debt and record asset prices we have a quick market clearing event later this year. Complacency is everywhere and asset prices are priced as if future is going to be trouble free.

      If that happens it’s going to require courage to buy when the ship looks like it’s is sinking. Try to have a plan for what you want to buy and how much you should pay. Recessions can be a great time to buy nearly anything as there will be people that have to sell even at a loss.

  2. Phoenix_Ikki says:

    Everything is getting more expensive, if and only if buyer strike is a thing then maybe the playing field could be even out a little bit but nope we just kick everything into the next high gear and let FOMO go into overdrive..

    No wonder the people making these ridiculous monetary policy get away with everything..general public seems to get punch in the face everyday and our response is may I please have another please?

    • historicus says:

      “… the people making these ridiculous monetary policy get away with everything…”

      Indeed. The Fed and Powell wanted this to happen…INFLATION.
      This was premeditated and intentional. And this is arranged theft, from one group to another. When central planners “decide”, they always intentionally assist one group and harm another.

      The Fed is instructed, mandated to “stable prices”. Yet, when the Fed Chairman stands before a group of “journalists” and promotes an inflation rate, any inflation rate, there is no “Hey, aren’t you supposed to promote STABLE prices?”
      Why isnt Jerome Powell indicted for the many breaches of his fiduciary responsibilities at the Fed?
      Have Fed Funds ever been 4% below inflation?
      Has the Fed ever purchased 30yr mortgages below inflation?
      Markets are locked up (housing, construction) and we have supply chain shortages…..and we have a fake interest rate environment that has a lot to do with all of it.

      • historicus says:

        Has a Fed ever partnered with a non pubic entity (Blackrock)?
        Has a Fed ever dealt in non federally backed securities?

      • kam says:

        The Fed takes it’s instructions from the ultra wealthy.
        You? You are the guarantor and the victim. That’s U.S. law.

        • historicus says:

          My point is that there was an agreement as to what the Fed would do…and COULD do…
          and both have been violated..
          The Fed and the powers behind the Fed know that there is ..
          no one watching
          no one accountable
          and that Congress, for the time being, is enjoying ever free dollar the Fed creates

      • Old School says:

        Government will look out for its needs first, especially when times get tough. It’s our job to look out for our needs first starting with our own family. That by nature is in conflict with government policy.

        If government becomes totally oppressive then black markets thrive. Its not really natural for government to be involved with every transaction between human beings.

    • NickL says:

      because are PAYING those prices mostly for things that are unnecessary… Ex. going out for dinner 5 nights a week, buying a $45,000 SUV on a $50,000 a year salary, buying a new Iphone every year which costs $1399 + tax

  3. Gyalogtank says:

    I might be wrong, but is this not the main route we deliberately chose? Biden’s plan does not contain any measures to reduce debt, on the contrary, it will increase deficit and spending to unsustainable levels. This is only possible if the purchasing power of the dollar declines sharply thus the GDP grows faster than the government accumulates new debt.

    So most likely this is not an error or an anomaly, but the new normal for at least a decade.

    • MyLadyHumps says:

      Was there a choice?

      Was there a viable media approved candidate or party who was going to put us on a sustainable fiscal path?

      Did Trump reduce deficits? Deficits were over a trillion prior to Covid!

      Both parties are culpable. The media is culpable. The people are culpable. It’s an unstoppable rolling dumpster fire of doom. I’m glad I got out.

    • Jdog says:

      Our government has been working contrary to the interests of the United States as a whole, for several decades. You cannot decimate the jobs base by offshoring , and increase the labor force by importing millions of illegals and not expect it to have ramification across the board. Our corporate laws encourage and reward offshoring when they should be doing the opposite.
      Lowering the interest rates and inflating asset values are a ponzie scheme to distract the attention of the masses until it is too late.
      This massive debt that the government is running up must be serviced, and that will mean drastically higher taxes in the future.
      The ever growing immigration will continue to displace Citizens at the lower end of the income scale increasing homelessness, crime, and the need to spend billions more supporting them.
      Everything that is being done will have increasingly negative ramifications in the future and yet no one is calling the government and the lying media on the lies and deceit. Like they say, you get the government you deserve.

      • Depth Charge says:

        When you have a populace largely consisting of dumbed-down, high-fructose-laden mouthbreathers swallowing narratives hook, line and sinker, this is what you get.

        • NBay says:

          What is this “mouthbreather” thing? I get it’s an insult, but I have no idea what it’s based on. Is it just your invention or did you pick it up from somewhere?
          Inquiring minds want to know. I’m sure I’m not the only one.

      • Lisa_Hooker says:

        When you are governed by tweets you get a nation of twits.

    • nodecentrepublicansleft says:

      Reduce debt? Where were you when President Cheney and Baby Bush the Lesser started TWO WARS and cut taxes for the wealthy?

      That was 2 decades ago and the bills will be coming for decades yet.

      Reduce debt? Didn’t you just watch Covid Don (“It’s a hoax.”) give away TRILLIONS to the corporations (who were already making record profits) an and the 1%?

      Reduce debt? What world are you living in? The corporations, the wealthy and the Military Industrial Complex will decide what happens.

      Too bad nobody listened to President Eisenhower’s last televised speech.

  4. Depth Charge says:

    I am still saving every single dollar I can and will continue to for the rest of my working days. The only discretionary purchases I make are 2 or 3 meals at my favorite deli per month, which is $60 total. I am saving 90% of my net income. Meanwhile, I watch mouthbreathers loading up on debt and talking about how msrp on a new truck is a “good deal.” I will be way ahead of these dillweeds in the long run.

    • BradK says:

      Best are the ones who indulge in $7 half-caff/half-decafe soy lattes all day long while whinging how capitalism has failed them.

      • Lisa says:

        There is nothing more stupid than spending money on things you can make at home yourself. People spend 30. a class to sit on a spin bike for one hour. Then they go buy their lattes. I hear them complain they don’t have enough money. I don’t get it

        • Pea Sea says:

          Whereas if they saved that money every day, in a mere 39 years they would have $100,000, which will be the approximate amount required for the deposit on an apartment at that time. God bless our economic system! Muh freedom!

    • Miatadon says:

      Maybe or maybe not.

    • Engin-ear says:

      – “I am saving 90% of my net income.”

      A truly impressive feat.

      Might come naturally for all adepts of the “Know thyself” (c) Socrates.

      That leaves a question of the savings management. But if you are not obsessed by money, let the inflation take it by an act of charity.

    • Michael Gorback says:

      Are you familiar with Keynes’ Paradox of Thrift?

      • historicus says:

        Speaking of Keynes…
        even Keynes said that at some point stimulus must be restrained or even halted. I guess the Fed folk never read that chapter….and I guess MMT doesnt discuss that.

        • nick kelly says:

          Keynes may be the most misunderstood, misquoted guy in history. (not yrs btw)

          The Left tends to think his ideas amount to MMT and approves, the Right thinks the same and disapproves.

          Keynes believed in balanced budgets, but balanced over the economic cycle, not year end. The government would spend during recessions, using the SURPLUS accumulated in the boom time.

          Then politicians got hold of the idea. Keeping a surplus? Why not spend it?

          Although overspending is usually associated with the Left, the US era of ‘deficits and debt don’t matter’ began with Reagan, who doubled the US debt accumulated over 200 years in 4 years, from one trillion to two trillion. But now this at least is bipartisan.

      • roddy6667 says:

        If everybody becomes thrifty, it affects the economy negatively, almost canceling the value of savings. However, this will never happen. Most people will always be foolish with their money. An individual who is prudent will reap the rewards of his actions. Keynes’ Paradox Of Thrift is a Straw Man.

        • Michael Gorback says:

          Has it occurred to you that people might curtail spending because they have to?

          Max’d out their credit cards, lost their job, upside-down on a mortgage they can’t afford?

          Check out what I posted here about income, savings, and investment. Read it and weep.

        • Jdog says:

          The opposite end of that paradox is that when everyone lives beyond their income on credit, eventually they become insolvent and the economy crashes in catastrophe.
          You cannot become wealthy spending your money faster than you make it….

      • DR DOOM says:

        Keynes Paradox of Thrift was a macro economic piece. It did not care about the individual armed with savings of sound money to protect from old age, hunger or an infirmity. Keynes perch was from the Fiat Central Bankers field of view which hates thrift and sound money. The whole point of a fiat system is to expose the peasants work product to an arbitrary system of fiat and fleecing. Engin-ear is worried about his future not yours or mine if we choose to embrace fiat consumption. Engin-ear has it right.

        • Michael Gorback says:

          If we have deflation he’s right. If the inflationistas are right he’ll get hammered.

    • Paulo says:

      What else can you do, DC? I’m retired and still save money. What, are we supposed to just spend everything we make all the time and live like we are old time sailors on shore leave with pockets full of prize money?

      You will be ahead in the long run. Just smell a few roses along the way. :-)

      • MiTurn says:

        Concur. And savings can save your bacon when the unexpected hits. And you don’t know it’s coming because, dah, it’s ‘unexpected.’

        But the trick is, how to save ‘money’ that won’t get eaten-up by inflation.

        • Paddy says:

          Isn’t saving money in a way that doesn’t get destroyed by inflation pretty straightforward? Put it in things that benefit from inflation. Also, if you have the means to store things, buy as far out as you are comfortable with. I like Darn Tough brand wool socks. $20 a pair. I know they’re going to get more expensive, so why not buy buy enough to last me several years?

        • Jeff says:

          Well the elastic in a sock is typically latex. That degrades over the years…

        • Michael Gorback says:

          Easy. Diversify among non-correlated assets. Unfortunately the Fed has kind of messed this up by not allowing true discovery of the cost of money.

          Divide your assets into cash, gold, stocks, bonds, real estate, etc. No matter what happens something will save your ass.

          This will definitely cut your performance compared to any given metric. My strategy has underperformed the S&P 500 by 50% in recent years but at 68 and retired Rule #1 is Don’t Lose Money.

          In this century stocks have been cut off at the knees twice and long term S&P 500 returns have not been impressive. I don’t regret my strategy at all.

      • David G LA says:

        We are all old time sailors on shore leave.

        • LifeRunningForward says:

          I wish but shore leave was a hell of a lot more fun than this!

        • Lisa_Hooker says:

          The sailors that have the best time on shore leave are those that spend the voyage fleecing their comrades with cards and dice. This methodology is now used by government banks on land.

      • Crush the Peasants! says:

        Yellin’ said quite a while ago, when she was head of the Fed – LOAD UP ON ASSETS! Sadly, the homeless did not comply.

        The age old strategy may be the best you can do – diversify. RE, stocks, bonds, and yes, cash.

        • Jdog says:

          Yes, that is right, Yellin is looking out after your interests…. just keep believing that….

        • sunny129 says:

          @Crush the Peasants

          Just diversify won’t save any one, if there are no uncorrelated assets in the current ‘everything’ bubble mkts.

          Uncorrelated predominantly with re S&P 500. That means even having some bearish positions, even though there is a cost for that. If one wants ‘downside’ protection, one has to give up ‘upside’ potential!

          NOW that upside potential carries more risk than rewards. Flashing reds has become permanent staring at you. Btw, no one rings a bell, when the bear mkt starts,
          (Been in the mkt since ’82)

      • cb says:

        anyone who can save is already ahead ,,,,,

      • NoPrep says:

        “just smell a few roses along the way” You stole that line from the great Ben Hogan. Ben stayed ahead with the money and minded his own business well right until the end.

    • Cobalt Programmer says:

      Over time, the debt will be paid for the price of a marble. Credit card companies will give easy credit to the indebted more than financially responsible. I wonder if the whole humanity in the hunter-gatherer period survived as free loaders from the mother nature without giving anything back. The polar opposite argument of the frugality is also a valid one. Money is a man-made concept. May be the top-brass in the feds see something good that we cannot see. Just enjoy the decline. It might be good idea to violate the rules and be sorry later.

      • Jeremy Wolff says:

        worst case scenario: we go back to hunter gatherer world. and those people were in touch with nature. not so terrible, as you say. can the world support 7 billion hunter/gatherers?

        • Cobalt Programmer says:

          Obviously we cant. Now, the population is reducing in the west compared to baby boomers. So are marriages and child birth in developed nations. Soon, the population will drop even in countries like India or China. The hunter-gatherer example is to say, in future, we may not need a huge forest to sustain the human race. US alone can produce surplus basic food. There will not be a lot of people to feed.

    • 2banana says:

      Living below your means and saving is a good thing.

      Hopefully you are not putting the savings into cash at 0.001% – especially with inflation at least at 4%.

      • cb says:

        What do you suggest putting the savings in?

        • Shells says:

          Others on this site have recommended I Bonds, and/ or paying down debt.

        • roddy6667 says:

          Precious metals are good. When inflation comes back with a vengeance, the price bump will cancel the loss of buying power. It’s a kind of insurance, not a stock or investment. Other than that, you can’t do much about inflation except to reduce expenses and increase savings.

    • bungee says:

      i just cannot imagine why saving in gold is not the main choice. it totally dumbfounds me. i too save a tremendous amount of my income and have no real debt. the last few years i have bought tools, materials and equipment cos they are still cheap. but as for pure savings? to just sit there? that’s what gold is for. you hate the fed but you stack their notes? wassup with that?
      and there’s another comment somewhere on this page about the rich hoarding all the money, which really brings us to the main conflict; that saving in money creates all kinds of social tension. saving in gold doesn’t have that problem.
      anyways it just absolutely amazes me, watching this in real time, reading comments on blogs about inflation and wealth preservation and gold not being the number one strategy.
      the shortages and price rises will come in waves and then all at once. for young people with no real wealth to preserve, my advice is skills. get some. if you want to stay busy just open a handy man service in any large city. your phone will never stop ringing and you will learn a ton about building and repair as well as money and people and law and language and yourself and work….and more.

      • Michael Gorback says:

        Gold is one leg of the diversification table. Do you know what happens to a table with one leg?

        I own gold and it is physical in one form or another. But I also hold cash, stocks, bonds (however repellent they seem right now), and real estate. Bonds have been problematic for me.

        For instance, back in 2009 my daughter was dating a guy who worked for a hedge fund. I mentioned that I wouldn’t be surprised to see the long bond hit 1%. He didn’t say anything but I could hear his eyeballs rolling in his head. I was slightly off, but the 30 year did dip below 2% and the 10 year has not broken 2% for a long time.

        I kept buying the 10 year until it fell below 2%. Who’d have thunk it would work out? I feel like I should dump my bonds but a little voice keeps whispering in my ear “You never know”. One day I’m gonna shoot that little bastard.

        • roddy6667 says:

          The time to buy bonds is when the yield is high, like 18% in the early Eighties. After the peak, you get back above market dividends for the term of the bond. Buying bonds at or near the bottom is asking for it.

        • sunny129 says:

          @M. Gorback

          Bonds offer buffer (in a portfolio) in case of flash crash or slow downturn. Once the GDP growth goes below 2% probably in after 4th qtr of 2022, bonds may be sought after. If nervous, reduce the % to your sleepong point.

          Why not try etf – TDTF (FlexShares iBoxx 5-Year Target Duration TIPS Index Fund) or MORT (VanEck Vectors Mortgage REIT Income ETF) I nibble them slowly and add when they dip and try to park some of my cash holdings.Check them out at

      • Old School says:

        If you live in the USA you have to buy stuff with dollars so at least your short term savings must be in dollars.

        Gold even though it stays the same has a standard annual deviation of around 13% so it is best thought of as a long term savings vehicle.

        Even though it’s a little hokey I like to use standard deviation an estimate for the time horizon for an asset so for gold it’s 13 year minimum and for sp500 17 year minimum.

    • NickL says:

      Is that $60 a MONTH at that deli or $60 a week.. Where in Manhattan is this place??

    • NBay says:

      “I am saving 90% of my net income.” DC, PLEASE!….explain that trick, along with this “mouthbreathers” insult and source/basis.

      Thanks, although I seriously doubt delivering verbal clarity is one of your abilities…..delivering insults and bitching/blaming seems to be about it.

      Not that I care much if you don’t respond, and likely won’t.

  5. BradK says:

    “Paying even more to get even less.”

    a.k.a. “Build Back Better”?

    There are two kinds of people in America: those who survived the Carter administration in the 1970’s economy, and those who think the glamour of Studio 54 was the defining facet of the decade.

    • Lance Manly says:

      Average GDP growth per year under the Carter administration was 3.25%, compare to a more recent admiration such as Trump where average annual growth was 1.03%. All numbers in constant dollars.

      • Jdog says:

        3.25% growth, with 17% inflation is not a situation you ever want to be in, believe me…

      • Old School says:

        Long term growth rate for USA keeps getting lower since world war 2. The bigger government gets the lower growth will get because by nature government is focused on politics and not efficiency.

        The concept of growth rate is pretty simple. The increase in the number of people working plus the average increase in productivity. Covid took a whack out of number of people working.

      • Jdog says:

        You are talking nonsense. I lived through it,

      • c_heale says:

        There was a lot more oil around when Carter was president.

        • Jdog says:

          What! The US is more oil independent now by a long shot than it was in the 70’s, apparently you never heard of the oil embargo that resulted in skyrocketing gas prices and major shortages and rationing…

    • roddy6667 says:

      I was partying heavily during the Seventies, and did not even realize that the economy was fuxored. As Flip Wilson said “What you see is what you get”.

      • polecat says:

        The thing is is that no criminality of top import EVER gets their peepee whacked!

    • cb says:

      So go ahead. Compare and contrast the Carter economy to the economy of today, or the past 10 years. Tell us which was better for people willing to work.

    • MyLadyHumps says:

      Carter allowed badly needed austerity to take root and he put Paul Volcker in charge at the Fed to finally snuff out inflation.

      Reagan showed up and fired Volcker, put Greenspan in charge and began the government policy of “deficits don’t matter”.

      Carter saved the country from an inflationary death spiral brought on by LBJ/Nixon/Ford. The price for saving the economy is being dragged through the mud. For those with integrity that is a price worth paying.

      • SpencerG says:

        Wrong, wrong, wrong. That is some real revisionist history you got going there pal.

        Carter appointed Volcker but then handcuffed him. Volcker tried to impose his interest rate hikes in early 1980 but Carter made him back down. Volcker started them back up again in November 1980… just three weeks after the election was over. Reagan (who had a degree in Economics let’s not forget) let Volcker impose the medicine and we got the Recession of 1981-1982 as a result… and FORTY YEARS of no real inflation to speak of… until now perhaps.

        Carter did NOTHING to save us from the inflationary spiral. Or nothing EFFECTIVE at least. All four years of his one term, inflation was 6.5% or higher… and it was higher each and every year of that term… ending at 13.55% in 1980.

        And far from “firing” Volcker, Reagan reappointed him in 1983. I think that Volcker felt pushed out at the end because he didn’t get reappointed to a THIRD term as Fed Chairman… but it certainly wasn’t because Greenspan was a loose money advocate as he prove in 1991 to George H. W. Bush’s detriment.

        Nor did Reagan begin a policy of “deficits don’t matter.” He had a war to win… and wars cost money. No one criticizes FDR for deficit spending to stop right-wing totalitarianism… but there are those who are appalled that Reagan did the same to stop leftist totalitarianism. They tell us more about themselves than they do either FDR or Ronald Reagan.

        • cb says:

          SpencerG said: “and FORTY YEARS of no real inflation to speak of… until now perhaps.”

          Money expansion (inflation 1) and rising prices (inflation2) has been continuous over the past 40 years.

        • roddy6667 says:

          The recession of 81-82 was only about 9 months long, followed by the Eighties. Life was good then.

        • phoenix says:

          It’s mind-boggling to me that people will defend Reagan still. Propaganda is a hell of a drug. If there is a god, Reagan is burning in hell as we speak

        • SpencerG says:


          There is always supposed to be SOME inflation. but in the eight years prior to Reagan’s election it exceeded 6% seven different years (and reached 5.74% in the other year)… and got as high as 13.55% in 1980. In the 40 years after the Volcker medicine was applied, it NEVER exceeded 6%. In fact it only exceeded 5% one time (in 1990 which prompted Greenspan to jack up interest rates and brought on the 1991 recession). It only exceeded FOUR percent in 1984, 1988, 1989, and 1991.

          Even with those small outliers, the inflation rate since the end of the 81-82 recession has averaged only 2.76%.

        • historicus says:

          Spencer G
          Right you are … thanks.

        • cb says:

          SpencerG said: “There is always supposed to be SOME inflation.”

          FED and Bankster/Wall Street propaganda.

        • cb says:

          @ historicus –

          Reagan: Many love him, but part of his legacy

          1, deficit spender
          2. amnesty granter

          Greenspan: Gag. Need I say anything?

          Inflation: Have you not noticed?

        • SpencerG says:


          “Defend” Reagan? I am happy to praise Reagan to the moon and stars. He was quite simply the best President of my lifetime… and his understudy (the first George Bush) wasn’t half bad himself.

          The Baby Boomer presidents who have followed have been pale imitators to the throne. I am always laughing at how they bounce taxes between a range of 35% and 39.6% and act like they have accomplished something. Ronald Reagan is like, “Hold my beer.” When he took office:

          -The top tax rate was 70%…he got it down to 50% and then 28%.
          -There were SEVENTEEN tax brackets… if you or your family got even the slightest pay raise it got taxed at a higher level. Reagan got it down to TWO brackets… but it is now back up to seven.
          -And because of inflation you were definitely going to get taxed more… the income tax brackets were not indexed for inflation!!! Reagan fixed that and there is no politician alive proposing to undo that reform.

          In addition to all of that, he defeated the Soviet Union with nary a shot being fired, rebuilt America’s military, restored America’s standing with other nations, extended the Social Security Trust Fund by 40 years, negotiated a tax reform that cleaned up the tax code, defeated inflation (or let Volcker do it), and put the American economy on an entrepreneurial high tech glidepath that it remains on to this day.

          Not for nothing did Barack Obama call Reagan’s presidency a “transformational” one. Combined with George H.W. Bush those twelve years created the very world that we live in today. The Baby Boomer presidents have tinkered around on the edges… but by and large they haven’t been able to undermine it… despite some concerted efforts they have EACH made.

      • Jdog says:

        Liberals love to revise history to the way it never was….

        • NBay says:


          “…those 12 years created the very world we live in today.”

          Same one we are all here bitching about?..

          ..or am I just being “revisionist”, Jdog?

        • Jdog says:

          Everything is built on the past, but not just 12 years. If you believe that, you not dealing in reality. Every time there is an election there is the opportunity to change the past. The fact is the Congress has far more to do with the condition of the country than any President, but then you need to understand civics to realize that..

        • NBay says:

          “Everything is built on the past”

          What keen insights you have!

          I’m out of my mental league, I defer to your wisdom and complete understanding of “civics”….I must have been asleep in grade school.

  6. zr says:

    I don’t see any inflation here in central Ohio. I think it’s because inflation hasn’t started talking about talking about coming to flyover country. and no, that last sentence wasn’t a typo.

  7. YuShan says:

    Much of the “growth” of the past years is actually inflation. Think about it: real GDP growth is calculated by taking nominal growth and correct that for inflation. If inflation is consistently under-reported, that means that real growth is also consistently lower than reported.

    • historicus says:

      How real is GDP if roughly one third of it is government spending…? and spending newly created money from deficit spending?
      Printing new money, then spending it is a barometer of the health of the economy? Or is it an indication of a “life support” system allowed by the Federal Reserve’s machinations?

      • RightNYer says:

        Right, exactly. I’m so tired of hearing about the economic “recovery” or how the economy is “booming.” Of course you can get “booming” numbers if you borrow and print money and then hand it out.

        But the consequences don’t come until later.

        • Swamp Creature says:

          Things are booming here in Swampland. The county dropped Covid restrictions and everyone is out there spending money like drunkin sailors. Traffic jams are back. My Irish pub was playing hard classic rock live music and the place was packed wall to wall. It was hard to find someone to serve you a beer. You can;t even get a tee time on the golf course.

          You doomsayers are off the mark. Its Weimer time a la 1924! Get with the program! Screw the future. There ain’t any. Enjoy the present!

        • Old school says:

          Swamp Creature,

          Fed’s have emergency force Fed a lot of cash into society. Once stimulus is over we have to go back to a debt ridden economy with poor demographics.

          We have a nominal 4% economy addicted to stimulus. Assets can’t keep growing at double digit rates. The bad debts are going to have to be written off and assets adjust to reality.

      • YuShan says:

        Right! The only two sustainable sources of growth are population growth and productivity growth. And of these two, population growth doesn’t benefit the individual so it is really only about productivity growth per capita.

        Productivity growth can come from innovation (working smarter, using machines, using slave labour, etc) or from working longer.

        That’s it!

        • cb says:

          @ YuShan –

          Productivity growth often doesn’t help the individual either, more and more so these days. It all depends on the distribution of that productivity growth and that benefit often disproportionately goes to the asset owning class.

          We have a concentrated wealth and power problem, consciously nurtured by the FED, allowed by owned lobbyists and politicians. The result being a debt slave society over-lorded by a rentier class. Interspersed we have groups that are making it, which keeps the system glued together.

        • Tom Pfotzer says:

          Working people don’t generally get the benefits of productivity.

          That’s the problem we’re not solving, YuShan.

          Takes a lot of skill and effort to capture the benefits of your productivity, and most of us (currently) don’t have what it takes to do so.

          Therefore we must accept what the people who actually do know how to capture the benefits of productivity are willing to offer us “laborers”.

        • Jdog says:

          If you think productivity growth benefits workers in any way you need to study the increases in profits vs the increases in pay. There is a divergence big enough to drive a fleet of tankers through….

        • lenert says:

          Make your eyes bleed:

          “APRIL 2021

          The U.S. productivity slowdown: an economy-wide and industry-level analysis

          Labor productivity—defined as output per labor hour—has grown at a below-average rate since 2005, representing a dramatic reversal of the above-average growth of the late 1990s and early 2000s. The productivity slowdown during these years has left many economic observers wondering why this situation has occurred and what factors may have contributed. To clarify potential sources of the productivity slowdown, this article presents an analysis of labor productivity and its component series—multifactor productivity, contribution of capital intensity, and contribution of labor composition—at both the economy-wide and industry levels, complemented with a survey of the contemporary productivity literature.”

          bls DOT gov/opub/mlr/2021/article/the-us-productivity-slowdown-the-economy-wide-and-industry-level-analysis.htm

        • YuShan says:

          @cb, @Tom Pfotzer, @Jdog

          Definitely agree! I was just pointing out which factors grow GDP in a durable way. But GDP is just what it is by it’s definition and it is not a good measure of how well the general population is doing economically and socially. (You may have noticed that I mentioned using slave labour as a way to increase productivity)

        • lisa2020 says:

          Productivity growth per capita in the strict sense does not reveal any increase in wealth per capita. Productivity per capita is quite limited by physicality issues of the individual. What is most revealing about the “distribution” and “redistribution” issues that are revealed in that decrease in productivity is found in investigating the sales of supposedly family-owned businesses in the US, and in land transaction sales. As more and more business are NOT owned, and more and more land is NOT owned by citizens, productivity per capita will continue to decrease. Redistribution of any wealth extracted by any opportunities to extract real wealth from US commerce activities is going increasingly out-of-the-US, and primarily to a few Multi-National entities.

        • Jdog says:

          “The U.S. productivity slowdown: an economy-wide and industry-level analysis”
          This is a perfect example of cherry picking data. In the 90’s and early 2000’s computers were just coming online and were increasing the productivity of the workplace by bounds. An office employee with a computer and a few programs could replace 3 or 4 workers from previous times. Of course that unusually high level of productivity gains could not be sustained, but if you look at say a 100yr time period, productivity is near an all time high. The problem is all the profit from those productivity gains have gone to the top 1% while the rest saw a decline in wealth.

        • c_heale says:

          Productivity growth requires more available energy. We’ve maxed out the oil so we are fcked.

      • Nathan Dumbrowski says:

        Fake it till you make it. Works for business I think the government is giving a full 110% effort.

        There are a lot of programs out there where extra money is being hosed to the people. PAU, Stimulus, QE, suppressed interest rates…

        This is an experiment that will be studied for 100 years

      • cb says:

        @ historicus –

        the more I read you, the smarter you get ……..

        you and the missed commenter, Unamused,,,,,,, bastions of common sense …………. and solid knowledge to back it

      • lenert says:

        Because government spending is 1 of the 4 addends used to compute GDP?

      • Up North says:

        The whole thing is a zombie.
        Only this is not a movie.

      • cb says:

        @ historicus –

        the more I read you, the smarter you get ……..

        you and the missed commenter, Unamused,,,,,,, bastions of common sense …………. and solid knowledge to back it

    • Saltcreep says:

      Yep, Yushan, it’s smoke and mirrors. The debt increasing at a high exponential rate is just a necessary measure in order to sustain the illusion of achievement and prosperity, even as we drop off from the artificial and unsustainable boost of the past couple of centuries.

      And still most like to sit around and blame their own favourite local political targets for the growing instability, inequality and insecurity in their particular locality. But the rising tide of discontent is not just some local or national concern, but rather a broader global trend that transcends political regimes ruling some given place.

      If we were smart we’d be looking for more fundamental causes for the issues we face. Changing policies within the existing framework of thought and trying to paper over symptoms we observe will get us nothing but even more pain eventually.

      I would claim that we have a problem with our expectations as to what the future can and should bring us, and we have a problem with our marriage to an idea of what we call ‘economic growth’ as being necessarily a positive outcome…

  8. YuShan says:

    These graphs look like the perfect boom-bust cycle setup to me. If the high prices stick, I see stagflation ahead because people are simply getting squeezed. If as a result companies go bankrupt, then we could get a debt deflation spiral.

    In the past decade, we have seen massive asset inflation combined with relatively low CPI inflation (per official calculation). But the opposite is also possible: massive asset DEflation while CPI inflation is high. Perhaps that will be the next stage. Central banks will be powerless to stop that.

    • lisa2020 says:

      Quite right. And, it is a whole loat easier to squeeze the life out of one little bug at a time, than a whole lot of bugs all at once. The mess is a lot easier to hide, and clean-up too. Strategy counts, especially with an invisible hand, and a fly-swatter. You gotta watch where you hit, when, and what. Who designs the fly-swatter, cleans up the bug, and how long the fly-swatters holdup in real time counts. Cheap ones, and poorly designed ones don’t last long.

  9. Engin-ear says:

    It is good to know some hard facts about inflation like the national average.

    Its main quality is availability (yet some would criticize the design).

    My understanding is that there are not many insights to be inferred from it. It is just an invitation to look closely to discover what is happening.

    It is primarily an accounting KPI, certainly correlated with uncertainty and peaceful wealth transfer+destruction. Peaceful means in comparison with alternative methods.

    So it is a game changer.

    Now the game could be changed peacefully or violently. The failure to predict the food riots is bad. The ability to provide the cash lifelines with credits or stimmies is good.

    We could also choose to follow the variation of GDP per capita to judge the prosperity creation over time, but we don’t do it.

    We could also follow the variation – and the number & % – of people under poverty line, but we don’t do it.

    • YuShan says:

      Instead of GDP per capita, I think median real wage would be a much better indicator because wealth is so concentrated.

      • lisa2020 says:

        That helps to establish a correlation, especially to PPP, and changes in real poverty indexes of specific nation. Presently the correlation is based on the USD as a relative reference point. The PPP from the OECD conversion rate website also helps. There is little easy access to the correlation points that really report the real opportunity to any wealth in any nation. Productivity, and wages alone do not reveal true long-term wealth, of the mundane examples of wealth that are commonly used. The real essential wealth items water, air, and land that can support life, and not only man’s life.

  10. njb says:

    Even if inflation isn’t transient, it’s time central banks stop funding government spending to address asset price inflation. It’s exacerbating wealth inequality and creating a huge divide between asset owners and people who live from pay cheque to pay cheque.

  11. historicus says:

    Inflation is theft of previous labors (savings) and current wages.
    It has been promoted by the Federal Reserve and the policies they implement.
    Thus, it can only be described as a prearranged theft.

  12. Michael Gorback says:

    What I see on both the personal income and total spending graphs are some aberrant swings with a return to the pre-pandemic trend line. Actually income returned to the trendline in late 2020 and then went haywire, probably due to stimulus checks.l

    Just put a ruler along the steady pre-pandemic segment and look at where both income and total spending are now. It’s pretty close to a straight extrapolation. Give it another month or three and see if the shakeups induced by relaxation of covid restrictions normalize. Powell just might turn out to be right.

    What would throw sand in the gears of this hypothesis is if they keep handing out free money. Then those charts will continue to gyrate.

    I’d like to see the income and total spending on the same graph. It looks to me as though the long-term income trend line has a steeper slope than total spending.

    • John Vermeer says:

      My pets and farm animals are looking for hand-outs and treats, they live for them, people aren’t supposed to do that, we’re supposed to commit to something and try to be productive. I was a teacher, a grueling demanding and sometimes demeaning job but I tried to find ways to help kids learn to read and write. Now teaching is beneath the dignity of most college grads. Instead, we get “stimmies”. Bah, humbug!

      • polecat says:

        “Instead, we get “stimmies”” ….

        I think Larry Fink et al would agree with you on that ‘$core’.

    • drifterprof says:

      “Give it another month or three and see if the shakeups induced by relaxation of covid restrictions normalize” [normalization of the trends relating income to total spending].

      If those trends do revert to “normal” that might not be a particularly good thing. Because along with those normal income/spending trends, total revolving consumer debt was on a long-term increase. So the previous normal relationship between income and spending was not adequate to stop the overall death march toward the debt crisis cliff.

      • Michael Gorback says:

        I didn’t say that persistence of the trend was good or bad, just that Powell might be right that this is a temporary shakeup.

        I think my posts have been quite clear that we’re in a horrible long term trend no matter what has transpired in the past few months, and that debt is the main obstacle to economic recovery.

  13. Dave k. says:

    Maybe I’m just a not that smart blue collar contractor, but I’ve been talking about stagflation for awhile. I have quite a bit of mortgage debt on cash flowing assets, and a company which runs lean and mean, where I can raise prices to combat these things, but for the average family……this is scary. I’m personally not worried because I’ve been smart buying assets at the right time, but people are going to get crushed. Housing prices can’t drop with the cost of lumber and labor so high. Wouldn’t surprise me to see this trend go for awhile.

    • Degobah Smith says:

      You appear to be a pretty smart blue-collar contactor. But I’m reasonably certain that housing prices can/will drop awfully fast if/when interest rates rise, no matter what the input costs may be. At least in terms of real currency. Best wishes.

    • Bill says:

      Lumber. They aren’t making any more trees you know.

      • Depth Charge says:

        Right. And they just figured this out a couple months ago. Same sh!t different day.

    • Depth Charge says:

      “Housing prices can’t drop with the cost of lumber…”

      I’m sorry, but this is asinine. Is your memory so short that you forgot lumber was $260 a short year ago? It’s already fallen from $1,800 to $1,250. The idea that, because a massive bubble formed, it cannot gall again and houses are forever expensive to build is simply gullible at best.

      Prices on commodities, especially when they hyperinflate into bubbles, crash hard. And there is tremendous demand destruction in lumber taking place right now. On the retail level, the little guy has completely stopped buying.

  14. The Real Tony says:

    The poor will be the new rich because they don’t own anything. Never a better time to own nothing because you can’t lose everything if you own nothing.

  15. Keepcalmeverythingisfine says:

    “Free College Tuition,” “Free Health Care,” “Free Child Care,” “Loan forgiveness,” “$600/mo unemployment supplement,” “$300/mo child tax credit,” “Stimulus 1, 2, 3 and probably 4,” “$6 Trillion Budget,” and my personal favorite “Tax the Rich” as if the rich won’t simply move away and take their money with them. It has been about 40 years since an entire generation bought into socialism, and here we are again. The ass-pounding the millennials will take for their fairy tale beliefs will be epic.

    There is going to be a currency reset. FDR did it in the 1930’s, Nixon did it in the 1970’s, and we are going to get another one soon. It will be a monetary event, make sure you are on the right side of it.

    • Putter says:

      Agreed. Reset is the only option. The massive credit buildup since Nixon took us off the gold standard, will require a much more devastating reset than before. Prepare accordingly!

      • Old school says:

        I think it’s going to be the slow plucking of the chicken. Multiple increases in fees and taxes and continued financial repression including Zirp and misreporting inflation.

        Slow method of reset gives people time to adjust to living with less feathers. If that isn’t enough then it will be fast over the weekend reset where we will all be somewhat poorer on Monday.

        • Malthus says:

          Prince Edward County, east of Toronto, just raised their fines for parking in a no parking zone from $35 to $400. That is rampaging inflation.

        • Depth Charge says:

          They’ve been stealing the futures of the children for over 40 years. It’s a sick system.

    • bungee says:

      totally agree
      this is going to be big
      theyre buying dogecoin

    • Jdog says:

      There is going to be the mother of all tax increases… First the Europeanism of America, look for a value added tax soon, and then the Balkanization when the people revolt.

    • phoenix says:

      “and my personal favorite “Tax the Rich” as if the rich won’t simply move away and take their money with them.”

      they literally won’t. we have historical data to prove this fact

      • Jdog says:

        Tax the rich was how they implemented the income tax which is in reality wage slavery.
        When sold to the people in 1913 the income tax exempted the first $4000 for married couples, which was far above the median wage meaning it did not even apply to the vast majority of Americans, only the “rich”.
        5 years later, that was history, and the working people have been taxed heavily ever since.
        There is an old saying about allowing the camel to get it’s nose inside the tent….

      • Happy1 says:

        They literally will and literally do. See Monaco. And Gates and Bezos in WA state.

  16. John Vermeer says:

    So it ISN’T just me. I’ve been made to feel the curmudgeon by friends and family for saving, buying blue chips, and noticing horrendous upticks in grocery prices. Two of em have told me they now have so much money they don’t have to worry about such things. HUH? We’ll see. I can’t imagine how a young couple comes up with $3mil for a ranch house in the ‘burbs.

  17. Seneca’s Cliff says:

    I had lunch with a Friend of mine who is a retired scientist and avid reader of the NYT. He was convinced that inflation was at historic lows because Paul Krugman told him so. This is a spot we have had lunch at for years and I am not sure why he did not notice that a year and a half ago in this same spot the hamburger was $9.25 and now it is $13.50 and the microbrew that was once $4.75 is now $7.00. But who am I to argue with a Nobel prize winner.

    • Wolf Richter says:

      Buy hey, that inflation was “temporary” because as soon as you drank the beer and ate the burger, they were gone. This is the new definition of “temporary.”

      • Nicko2 says:

        Paul Krugman has another piece in NYT today about the dominance of the USD$. Fun read. ;)

      • MCH says:


        Would be interesting to see what that inflation is like for rest of the parts of the world.

        Curious especially to see what is the second to the fifth largest economies in the world are seeing relative to this spike in inflation in the US.

        • Wolf Richter says:

          I looked at Germany’s inflation the other day. In Dec, YOY, it was still negative. But since then, it has shot up. By April, it was +2% yoy (from negative in four months!). There are now estimates that it will hit 4% before the year is up. And Germany was in lockdown this spring (still is, I think)!

        • Saltcreep says:

          April CPI here in one of the smaller economies of the world (Norway) came in at 3% annualised (with goods up 4,7% and services overall 1,3%, with labour intensive services up 4,1%), That was in the face of a strengthening currency over that timeframe. Figures for May to be released next week.

    • Nathan Dumbrowski says:

      Maybe the spot is just making up for all the lost revenue during COVID. They surely will drop the prices back down when things normalize. They probably had to pay all their workers and rent and obligations 100% during the last 18m. So keep going back and report to the wolfstreet if the trend was temporary or permanent

    • Depth Charge says:

      Krugman is an idiot. He once penned an article “crude oil is NOT in a bubble” right before the $150 crude bubble popped.

      • roddy6667 says:

        You could probably run a profitable fund that invests in the opposite of what economists say.

      • historicus says:

        He also shorted the stock market (told others to) when Trump was elected. That was so wrong as to be spectacular.

      • SpencerG says:

        I wouldn’t say that he is an idiot. But he does let his partisanship overtake his better judgement an awful lot.

  18. Phoenix Rising says:

    As consumers, we can’t control what the Fed does, but we can control what we do with the money in our own wallets. Substituting the products and services of companies who ride the inflation bandwagon with the products and services of companies who hold the line on price inflation is one of the few ways we can control the adverse impacts of inflation. If enough consumers did this, companies would think twice about being so eager to raise their prices. Remember, when they lose the sale of a product or service, they forfeit not only the incremental price increase, but they forfeit that product or service’s entire contribution to their fixed cost. Eventually, it hurts their bottom line…their shareholders won’t like that.

    • eastern bunny says:

      If you substitute those products with cheaper ones then companies making them will stop or go bankrupt as they need to make a profit to stay in business.
      The cheaper products will now increase in price, so you will pay more for a worse quality, that is how shortages develop.

      • Phoenix Rising says:

        No, it’s not a given that those companies will go bankrupt. It is likely though that their CEOs will not be able to stand up in front of their shareholders and brag about how they’re using their “pricing power” to deliver record-breaking profits.

        • Michael Gorback says:

          Wright’s Law states that as more units of a product are produced the price will fall. If we have an economic recovery and this happens the highly leveraged companies that created fake stock prices and overly large dividends using cheap debt are going to have problems going forward. They won’t have pricing power.

      • MyLadyHumps says:

        Are companies still allowed to go bankrupt?

        Beef gets too expensive – substitute chicken
        Chicken gets too expensive – substitute soylent green
        Soylent green gets too expensive – learn how to fish

        Give a man a stimmie check and he eats for a day. Teach a man to fish and he eats for a lifetime.

        • Michael Gorback says:

          Build a man a fire and you keep him warm for a day.

          Set a man on fire and you keep warm for rest of his life.

          — Terry Pratchett

        • Lisa_Hooker says:

          Teach a man to fish and before he can eat he has to buy a pole, line, fishhooks, bait, and most important of all a fishing license from some government.

  19. Swamp Creature says:

    Over this Memorial Day weekend I had time to go through and check food price inflation over the past year. I had saved all my grocery receipts for the past year sorted by month. I was surprized to find out that there was virtually NO FOOD PRICE INFLATION! Of the 30 items I bought regularly from April 2020 to May 2021 only three showed and increase at all, and they were imported items from Europe or non-food items.

    So all this fear mongering about grocery stores jacking up prices is nothing buy total BS. And I’ve got hard data to prove it.

    • drifterprof says:

      “The average price of food in the United States rose 2.4% in the 12 months ended April, slowing some from the previous 3.5% increase, according to the latest inflation data published May 12, 2021 by the U.S. Labor Department’s Bureau of Labor Statistics (BLS).”

      So it would seem that your items are wisely chosen to avoid inflation.

    • Ron says:

      I don’t know where u shop but here in Nebraska meat has increased 75-100 % also very few sales grocery stores have it figured out pay or don’t buy I’ll take the later

      • Wolf Richter says:


        Maybe Swamp Creature is vegetarian?

      • Swamp Creature says:


        This may be a good time to switch to a more healthy diet, and save money at the same time. And save a few cows.

        • Jdog says:

          Healthy? Save cows? Naw, Paleo is the way to go. Few veggies with you steak is fine, but that bread will kill ya….

        • roddy6667 says:

          I’m 73 and live on mostly red meat and a few low carb vegetables. My last physical 3 weeks ago had numbers like a healthy 19 year old. Except the height. I’m about 6 inches too short for my weight. I’m not changing my diet. Pork is my favorite vegetable.

      • Anthony A. says:

        Yesterday while in Costco, the baby back ribs I buy once in a while for $3.89/lb were $4.89/lb. All the meat products were similarly higher in price. Maybe it was the holiday weekend push, but I don’t think so.

    • Wolf Richter says:

      Swamp Creature,

      It’s not that simple because grocery store inflation doesn’t work that way. Grocery stores are incredibly smart about hiding price increases.

      Example 1: They have sales and specials that make long-term price comparisons tough because prices jump up and down all the time, depending on what is on sale.

      Example 2: Here is what 4% inflation might look like on the shelf:

      5 items, each $4.99 in May 2020; total $24.95. In May 2021: same 5 items; 4 = $4.99 and 1 = $5.99. Total = $25.95 = 4% inflation. But if you miss that one item that jumped by $1, you miss the inflation.

      Or, same 5 items, same price $4.99 each over time, but the package of one of them is 20% smaller, the rest are the same. Between the 5 items, you have 4% inflation, without price changes. If you miss the reduction in size of that one item, you miss the inflation.

      So I checked my Costco list Sep 2020 v. May 2021 (7 months). Most items with no price change, but a few with hefty price changes, including one $9.99 item where the size got smaller but the price didn’t change. I’m the Costco-goer in our household, and I didn’t notice the size-change. My wife did when she opened the package. We were just talking about that the other day.

      And then what about the item that I stopped buying because it got too expensive and I felt like it was a rip-off? Happens. But just because I didn’t buy it, doesn’t mean that the price didn’t change.

      That’s how it goes. It’s very tough to get a good read on what grocery store inflation looks like, based on personal shopping habits.

      • Nicko2 says:

        Indeed. Prices for products stay the same…..but the packaging gets smaller. Shrinkflation!

      • Swamp Creature says:

        “It’s very tough to get a good read on what grocery store inflation looks like, based on personal shopping habits.”

        Sorry Wolf, Its not that difficult. I did a careful analysis of prices and quality over the past year at the same grocery store.

        I’m a pretty boring shopper. I buy the same items every time I go to the grocery store unless they are discontinued.

        I checked sale price items and figured that all in. I’ve also made sure to compare identical items of the same size and quality. I didn’t look at substitute products. I looked at only items that were identical. . Though we’ve certainly changed our eating habits because of the pandemic and the desire to keep in good health by eating more basic raw vegetables and less meat my data is bullet proof.

        The only thing I have noticed is a continued supply chain problem. I now have to go to Safeway to get some items that my local Chain Giant Food does not carry.

        That has caused my food bill to increase because Safeway is 10% to 15% higher prices on most items including produce. I’ve even set up home delivery of non-food items from Safeway because I’m tired of complaining about supply chain issues at Giant (parent CO Stop & Shop)

        Red Meat may have been going up, but we don’t eat much of it as we are on the “Mediteranian Diet” . We have fish, rice, salads, fruits and vegetables. Those prices haven’t changed for over a year. My data shows that.

        • drifterprof says:

          Swamp Creature: “So all this fear mongering about grocery stores jacking up prices is nothing buy total BS. And I’ve got hard data to prove it.”

          So your original assertion was that: Prices are not increasing is total BS (universal general statement).

          Then your logic morphed into: Prices don’t increase if people are smart like me and buy food that is low-priced and healthy.

        • Swamp Creature says:


          I never bought much meat in the 1st place. So the meat price increases didn’t affect me very much. The few items I do buy didn’t increase at all. I can’t do price comparisons for something I had no records of. I compared prices on things I had solid records. That was my point.

          If you want to go with a diet of frozen food, junk food, heavy red meat diet and complain about price increases then that’s your choice. I don’t know anything about the pricing structure of these items since I don’t buy them.

        • lisa2020 says:

          Depends where you live. Prices vary locally and regionally. I can buy milk in Aldi’s in Ohio at one price. Milk 20 miles away in Pennsylvania, Erie is another price. Same with eggs, and many other basic “necessity” food items. Cream, artificial coffee whiteners- phenomenal price variances. Depends on statistics within the chain and what parameters are used for specific markets within the chain’s “economy and supply profiles”. Some is due to accessibility to certain supply-chain distribution access points for the distributor, such as Aldi, within the state. Only certain products are sold/distributed to certain locales too. What is available at one store is not often available in other stores. Same at Walmart, Giant etc.

        • Saltcreep says:

          Well, Swamp Creature, in that case someone along your supply chain is sucking up the higher costs by shrinking their margins. If you’ve been sitting on ETFs or futures this year relating to anything from wheat to corn to soybeans to lean hogs to sugar to coffee to salmon to just about any other food product you might care to think about, then you’ve been making out like a robber baron.

      • Michael Gorback says:

        If you want cheap veggies get set up with hydroponics. I started about 12 years ago. You can get great yields, there are no pesticides if you’re indoors and they look and taste better than what you get at the store. I can grow 15 romaine lettuces in a 2×2 foot area. Seed to harvest is also much faster.

        You can buy expensive kits that are pretty much on autopilot but your time to breakeven will be crazy high.

        I mostly use Rubbermaid tubs with holes cut in the tops to hold the plant medium cups. I usually use 3″ cups so you need a drill with a 3″ hole cutter, or a magic marker to draw the holes and then try not to cut your fingers off when you cut the holes using a knife.

        A lot of veggies don’t need extra aeration (lettuce and tomatoes can be done this way) but for a few bucks you can put in an aquarium air pump. I have one with 4 outlets so I can aerate 4 tubs with one pump.

        You’ll need growth media. I use hygroton which is baked clay pebbles. After harvest you salvage them and clean them and re-use. However, hygroton doesn’t cost much so some people throw it out.

        So far your cost is in fixed reusable items. The other initial and ongoing costs will be light and nutrients.

        Light will be partially one-time (the fixture) and part ongoing cost (replacing bulbs). With the advent of LEDs I haven’t had to do any replacement for years. Their energy draw is minimal.

        Then you need nutrients. These are expensive in a cost/volume sense but in reality you’re using small volumes of nutrients.

        Just add water.

        If you want to go really cheap and simple check out the Kratky method.

        Another advantage is you can grow things out of season. I like spinach but it’s a cool weather plant. In an air conditioned house I can grow it year round.

        When I have everything going, I can come home, pick some spinach, lettuce, and tomatoes, toss in some chicken straps and cheese, oil and vinegar and I have dinner. A few days ago I made a quart of gazpacho.

        If you want protein you can do aquaponics. This entails a fish tank and a pump that circulates the fish water through the plant roots. You feed the fish, the fish pee out nitrates and feed the plants. So build a fish tank, throw in some catfish, and crank it up. Now you have veggies and catfish to eat. I’ve never tried this myself.

        Although these systems do require water, the amount needed is far less than traditional dirt gardening.

        • roddy6667 says:

          Can you grow beef with hydroponics?

        • Tom Pfotzer says:

          Good report. Do-able for almost anyone.

        • Depth Charge says:

          When I used to grow vegetables I realized it’s cheaper to just buy them from the grocery store.

        • c_heale says:

          If they are indoors, at some point you will get bugs – and since they are indoors they will probably be harder to get rid of than if they were outdoors. Now if you have bugs, you can either have lower yields, work your ass off to kill them organically, or use a pesticide. And the pesticide or you working your ass off may not kill the bugs.

          But the most important problem with hydroponics is that because they are not growing in soil they miss out on nutrients not just KPN). They will never be as nutritious as plants grown in soil. Fish pee ain’t enough.

      • Lisa says:

        Costco had watermelon for 6.99. I knew that was expensive. I went to Aldi it was 3.99 and another local grocery store it was 2.99. Not so wholesale after all. I guess it offsets the low cost of the maple syrup

      • SpencerG says:

        That is really interesting Wolf. I guess that I haven’t been paying as much attention as I need to. I always ascribed the smaller packaging sizes to the manufacturers and producers… but you are right that it is the grocery stores that are actually setting the prices for everything.

    • Paulo says:


      I follow prices very very carefully and they have really inflated, especially beef. My sister in law is grocery store manager and she absolutely knows the prices along with the ebb and flow of shopping preferences.

      Maybe it’s just a local phenom for all of us.

      Down below Wolf mentioned vegetarianism. Vegetable and fruit prices have also gone crazy. I am always thankful we grow most of our own veggies with greenhouses and gardens. But when the prices shoot up we don’t buy and simply adjust adjust our menus to suit what is within reason.

      There is a huge drought rebuilding in the SW states. The grain producers are sweating over water in the mid west. It looks pretty scary. There will be higher prices yet.

      One item we permanently gave up a few years ago were pine nuts. I used to love to roast them and put them on pasta dishes. Not at $35/lbs. Funny, this year my neighbour gave me a giant bag of them at Christmas. I asked her if she knew what they were worth and she just told us to enjoy them. So we did. It was a regift most appreciated.

      • coalman says:

        Here in Oz, live beef cattle price just went over $10 a kilo.The rustlers are going to be very busy this spring.

      • bungee says:

        just came back from farmers market and it sure does feel like prices are way up. we spent 80 bucks there and it’s just never been that much before. (i do not have the hard data though). usually i walk away thinking how cheap everything was. not today. worth every cent of course.

        • Depth Charge says:

          Farmers’ markets are a ripoff. The grocery store is much, much cheaper. I used to go to the markets to support the locals, but the last time I went I bought a 4 pack of oatmeal/chocolate chip cookies for $10, and they were the worst cookies I’ve ever had in my life. I never went back.

      • When the inflation gets serious, do you think there is going to be a point where shopping habits change significantly? The poorest portion of the population also tends to spend money in the most wasteful manner. They’ll pick up a small bag of potato chips at the corner convenience store when they could get 4-5 times as many chips for the money at a larger store. If potato chips get really expensive, will some shoppers simply stop buying them and instead buy the oil and potatoes and fry something up themselves? It won’t be the same a potato chips, but you can probably get 20 times the calories for the money and better nutrition. My hunch is that we will never let things get so bad that people have to learn to be more frugal. There will be cries that we “need more money” and more food stamps will be handed out.

        • josap says:

          We have made homemade potato chips a few times. They taste far better than store-bought. But … it takes all day. The oil is expensive.

          I priced out making tortilla chips a while ago. The cost of the oil and uncooked tortillas was as expensive as just buying a bag of chips.

        • Saltcreep says:

          Hey, josap, I would recommend that you buy some plantains, slice them and pre-salt them, and then shallow fry them on medium-high heat in a thick-bottomed frying pan. Beats any potato chips.

      • Swamp Creature says:


        How many times do I have to repeat myself. Fruits, vegetables, and produce are the same price now around here in the Swamp as they were 12 months ago. There is NO INFLATION in these items!

        END OF STORY

        • I don’t think anyone really believes you. Most of us probably don’t even know where the swamp is and therefore cannot confirm or contradict you. Most of us probably agree with Wolf that it’s just too difficult to measure. I have been vocal about stating that I see low food prices in Nevada, but I think it’s insanely difficult to measure objectively. I recall celery becoming extremely cheap at one point (25-50 cents a bunch). A few months later, it went up 5-6x, presumably because there was no way to make money, so farmers stopped producing it, leading to a shortage. I see these variations occur constantly. There is also the question of whether some supermarkets sell fruits and vegetables at a loss because they’re making money on other things. Right now I notice that apples are more expensive, but I cannot tell whether it’s a temporary supply issue or not.

        • Jdog says:

          Who are we going to believe, you or our lying eyes and checkbooks….

        • says:

          I shop at the open air produce markets in London…£1 a bowl for blueberries, strawberries, peppers, broccoli (usually 2 heads), cauliflower, zucchini, etc….Still the same although the independent stall holders are disappearing one by one ….once it all goes corporate we’re screwed….I have noticed shortages of certain items as in not available anywhere

        • Swamp Creature says:

          I heard there is a major drought in California. This may affect food prices in the future. You will look back at the prices today as “the good old days”


    • RightNYer says:

      Publix just raised the price of a gallon of milk from $3.99 (it was around $3.69 if I recall correctly pre-COVID) to $4.19.

      The meatballs that were previously $5.99/pound are now $6.49 or $6.99 a pound, depending on the week.

      At Costco, the 3 pound bag of broccoli went from $4.99 to $5.99. The Spanish queen olive 2 pack went from $7.99 to $11.49. The two dozen eggs went from $3.39 to $3.69.

      There hasn’t been inflation in EVERY item, but overall, there absolutely has.

      • Swamp Creature says:

        These price increases at COSTCO may be a result of them paying their employees too much during the pandemic. They need to get with the program. Pay starvation wages and focus on sale volume and bottom line.

    • Jdog says:

      What your receipts don’t show you is most pre packaged foods have reduced their sizing, while keeping pricing the same to mask the price increases. There has been substantial price increases over the past few years, and if you do not see it, then you are really not paying attention…

      • Swamp Creature says:


        I’m paying a lot of attention. That’s why I saved all my receipts for a whole year, and spent 2 hours tracking the price changes over the past year for about 40 items which were identical in the period. Not many people have taken the time to do this. I was shocked to see that there weren’t any price increases on the 40 or so items that I could compare prices over the period.

        I don’t buy much in the way of pre-packaged foods so I wouldn’t know about these shrinkflation gimmicks. I buy everything from scratch and there have been zero price increases in the last 12 months. Even the fresh fish has not gone up at all. My grocery bill is the same as it was 12 months ago.

        • Jdog says:

          Like Wolf said, grocery prices are all over the place. Up one week and down the next. I find it really hard to believe you were able to accurately calculate it.
          I know this because I am one of the few who take advantage of the huge price swings buying mass quantities when they drop and not shopping when they are high.
          Sometimes you have to wait months to get the good deals, and then fill the cart.
          That is how I measure, the cost of a cart. What I was buying a few years ago for about $100, is now usually $150 to $180.
          Funny you should mention seafood, I love King Crab, but have not been able to find it under $26/lb. for a year or two…
          It was about half that 3 yrs ago.

        • VintageVNvet says:

          Going to agree with you SC, here in the store a friend works in in the ”Saintly Part” of the tpa bay area:
          Surely, some things have gone up and down, a bit,,, but, for the vast majority of the stuff we buy, prices have been exactly the same for the last couple or three years, including the ”specials” that every grocery market every where has been doing at least in the last 60 years since I was working at the only ”supermarket” in Collier County…
          I could give a list of similar or even lower pricing for the same quantity of various foods, all ”top of the line” here and in CA where I was working years ago and visiting years recently.
          Most of what I see in the way of price increases are based on ”sucker deals” to start with, e.g. ”franken foods” and other similar foods from factories where the goal is to remove all or most of the nutritional value and substitute ”taste” preferences with no or very little nutrition.

    • ru82 says:

      You better check to make sure they kept the price the same but they shrunk the size of the container.

      A half gallon of ice creme is not a half gallon anymore. The prices has stayed between 3 to 4 dollars the past 5 years but the size has dropped from 4 pints to 3 pints. A 25% reduction or lets say a 25% increase in price?

      • Depth Charge says:

        I wish ice cream went to $100 per half gallon, because I don’t need it and would quit buying it. It is one of my few weaknesses, but it is not healthy whatsoever. Even if I don’t buy it, I will walk by the section and allow my mouth to water as I look lovingly at all the flavors.

        • RightNYer says:

          My wife and I like Ben & Jerry’s, but it’s absurdly overpriced. So the way we cut our consumption is to only buy it when it’s buy one get one free.

        • Depth Charge says:

          I used to love B&J. Then they went woke. Haven’t bought it since. Now Haagen Dazs just went woke. They’ve been added to the list.

        • RightNYer says:

          Yeah, I hear you, but the list of companies we can buy from is dwindling more and more.

          I am an ardent supporter of the 2nd Amendment, so I try to avoid any businesses that take positions against it.

    • 728huey says:

      But you’re not accounting for physical deflation of goods, which is a hidden form of inflation. I.e., that $3.00 box of cereal gave you 16 ounces of cereal last year, but this year you’re paying that same $3.00 but getting only 13 ounces of cereal. So in the end you’re getting less for your money.

  20. Glass Half Empty says:

    Physics + Math x Demographics = we are all f*cked.
    Adjust accordingly.

  21. Artem says:

    I love the “real” series since it’s now becoming relevant. When in inflation is close to 0, the difference between “real” and “nominal” is…


    • Phoenix Rising says:

      Well that’s the thing…actual inflation is never really close to zero. The BLS’s hedonic quality adjustment BS only makes it appear that way at times. I wish someone would publish a version of the CPI removing all hedonic quality adjustments.

      • bungee says:

        isn’t that what shadowstats is all about? (im betting Wolf doesn’t like that guy’s methodology)
        you can check it out though.

  22. MonkeyBusiness says:

    YOLO. Spend it all!!!!

  23. Resjudicata says:

    Opinions are like belly buttons. Here’s mine:

    We’re in our 40’s. 2008 taught us a deflation lesson. We were very frugal 2008-2019. We paid off all our debt, including student loans, cars, etc. except our house. In 2011, we even took $50k to the closing table to sell a house we bought in 2005. In 2019 we sold our house and all our investments, except an office, and went all cash. No debt. The yield curve was inverted, the fed was dropping rates, and we thought the economy was on the precipice. We thought deflation was on the horizon. To ours and everyone’s surprise COVID hit early 2020. Initially we thought we were geniuses and we were going to buy assets, including a new house, for a fraction of their prior cost. Wrong. The fed didn’t drag its feet like 2008. The pandemic gave the fed and fed gov the cover they needed to turn on the money firehouse and spray it all over without any serious public outcry. The writing was on the wall. So we quickly bought a house, closed last June, and went back in on investments, including buying a second new office. Since the pandemic began we have taken on significant new debt. We are not all in and have a very large cushion to handle any hiccups.

    The fed is a status quo machine. It’s in the business of maintaining the status quo of the system at all costs – not to help the rich, but to help the country as a whole vs it’s competitor countries, which in turn helps the rich more than joe six pack. The fed learned a lesson in 2008 also. The system requires rising prices and rising debt in perpetuity, and it cannot drag its feet on hitting the accelerator or you’ll have deflation. The fed is way more scared of deflation than inflation. The fed has been dropping rates for over 30 years and now is out of runway to drop them further. That’s why they started QE, and this last go around pulled some new tricks, some of which they didn’t even really use. After 2008, the fed never substantially raised rates and never unwound its balance sheet. A new economy formed around the feds “temporary” tools and the fed was trapped. The fed knew if it did so the economy would crash, and it proved that when it tried in 2017ish. Same holds true now. The fed is going to keep its foot on the accelerator and cannot reverse course or the system will crash. I expect prices to continue to rise, and probably quicker than before. Unless inflation gets seriously out of hand, and it probably won’t, the fed is going to keep forcing everything higher. That’s what I think and that’s how my family has voted with its pocket book.

    • Nicko2 says:

      It’s dangerous to assume rates will never rise. They were 2% just a few years ago. They can and will go up again.

      • Resjudicata says:

        I didn’t say rates will never rise. But I will prognosticate that rates won’t rise substantially over the immediate term.

        • I believe rates will rise but not inflation. Government is loathe to admit inflation, and we have already had hyperinflation in assets. (What happens after hyperinflation, is deflation, or currency reset or collapse) Now that labor has been automated out of the inflation equation that variable has been nullified. A rise in yields implies tighter credit, but that will not be the case. Fed and the shadow financial system can keep credit flowing. As rates rise the Fed can roll their balance sheet forward, and go further out the yield curve, to 100 years if need be. You just cancel one IOU and write another.

        • yxd0018 says:

          Ambrose Bierce:
          “What happens after hyperinflation, is deflation, or currency reset or collapse”
          Not true from 70s. Fed can sustain with unlimited ammunition.

        • Jdog says:

          Once inflation reaches double digits, it begins to behave like a feedback loop due to frontrunning. This means the government cannot control it, short of drastically increasing interest rates.
          If there is one thing the government is adamant about, it is control, so they will do what they need to maintain it.
          If you look at the 70’s, inflation was ramping up despite real problems in the economy. Once it got going it created its own economy…

      • MyLadyHumps says:

        It’s dangerous to assume rates will ever rise.

        Inflation will barrel out of control and the Fed will only expand their bond buying program to include everything and artificially hold interest rates at rock bottom despite inflation.

        Fed policy is to let inflation rage out of control and address it by denying its existence.

        This is why inflation has started to run hot and why it will spiral out of control. Those are just the facts – do with it what you want.

    • eastern bunny says:

      That an a accurate description of a Ponzi scheme that the Fed is engaged in.

    • yxd0018 says:

      Your comments are more realistic than most permabears on this site. I think that explained a lot about price jumping by the mass, not FOMO crowds. People should quit whining and act correctly at the moment, myself included.

      • RightNYer says:

        I’m really tired of anyone who sees huge structural problems with our economy and future described as a “permabear.”

        Yeah, keep burying your head in the sand up until everything collapses.

        • Resjudicata says:

          I think a person who sees the problems is a cynic. A person who always thinks system failure is imminent is a permanent. I’m not calling you either. Just my nomenclature.

        • Biorganic says:

          So much agreement. I have several good friends who are doing rather well, mid thirties, who just blithely believe everything is great now that USA is opening back up. They think their coding jobs are untouchable.

          Anytime I try to suggest there are any sort of systematic issues in the system, corporate debt, US debt, stagnant wages, real potential for sustained inflation etc, they will just look at me like I’m crazy. Same goes for my father, who is rather successful and about to retire. I’m sure his market exposure rt now would horrify me, or other longtime WS readers.

          I don’t really think it’s possible to get through to some of these people. They are currently still doing fine/well and until that fundamentally changes their views seem likely to stay the same.

          It’s all rather frustrating to me, I have 40% market exposure and continue to work towards my higher degrees in STEM. Frustrating because for all the scientific research I’m likely to contribute, I may never catch up to my friends success nor my fathers standard of living.

        • yxd0018 says:

          To RightNYer,
          As regular joe, we can only cope and control what we can control. History shows many times the collective wisdom can overcome obstacles one way or the other. The sky is NOT falling.

      • Depth Charge says:

        Resjudicata is just one of the sheep who ran out and did what other sheep did, driving prices to the moon with his FOMO. This game just started. We’re in the early innings. The FOMO crowd is going to get slaughtered. Watch and learn.

        • Resjudicata says:

          Mean words won’t make you right. I’m open to debate thoughts. Thx

        • Depth Charge says:

          What mean words?

        • Resjudicata says:

          You called me a sheep. That’s not helpful. I can say mean stuff too but won’t. No one here is stupid. We are all students. Respect others opinions.

        • Depth Charge says:

          Sheep, herd, whatever. It wasn’t meant to insult, it was meant to illustrate you are one of the many in the massive crowd running to do something at the same time as everybody else, leading to wild market swings.

        • Resjudicata says:

          I guess that makes you a gopher. Did that help the conversation?

        • Depth Charge says:

          Truth hurts, huh? The fact of the matter is that every single FOMO buyer IS the problem. Without them, these bubbles aren’t even possible. I don’t care for them much, to be honest. I’m tired of debt-junkies making life more expensive for everybody else.

    • MarkinSF says:

      Great post. The logic is spot on. However, you did buy at the top in 2005 and may have done it again in 2020-2021. The Fed’s mandate hasn’t changed.

      • Resjudicata says:

        Good point. You are correct. We’ll see if I got it wrong again ;)

        • Resjudicata says:

          In my defense, for whatever it may be worth, we made a 150% nominal profit on the house we bought in 2011 and sold in 2019.

        • Nicko2 says:

          You sold for profit! Congratulations. Buy low, sell high!

          ….but taking on more debt is still risky!

      • historicus says:

        The Fed’s mandate is what?
        “Stable Prices?”
        “Moderate long term interest rates”?

    • Nathan Dumbrowski says:

      BRAVO. Have to give you a hand. You spoke exactly what I think about the situation. Good on you for jumping back in cautiously. Great read

    • Tom Pfotzer says:


      First-rate thinking. You’re doing better than most, and learning very fast from your mistakes (few tho they may be). Your ability to collect and synthesize an astounding amount of conflicting info to develop that situation analysis is extraordinary.

      It’s not just the Fed that “has no choice”. The Fed is proxy for our entire society. When the Fed is finally forced to “take the foot off the accelerator”, there’s going to be a lot of dislocation.

      And we all are wondering…when that moment will arrive, and what that “dislocation” actually looks like.

      • Chris Herbert says:

        It’s not like ‘taking the punch bowl away’ is a brand new concept.

      • RightNYer says:

        I do agree with much of what he wrote, but not that the Fed has “no choice.” They do have a choice. Accept pain now or push it off to the future. None of our “leaders” think this is sustainable. They know it’ll be a huge problem for the future generations. They just don’t care.

    • Jdog says:

      If you think the Fed is out to help joe six pack, then you should see a doctor and tell him you may be having serious delusions, and the inability to tell fiction from reality….

      • historicus says:

        The Fed induced inflation will grind down and pound down the working people of this nation.
        All designed by the Fed to allegedly help “main street”.
        What a joke.
        The Fed has denied the ability for people to save their way into some type of financial stability by removing any fair return on savings.
        The Fed forces debt creation, forces desperation investing, yield chasing, risk return skewing.
        Rates being zero or 2% doesnt change the way everyday people or everyday businesses behave…but it sure pumps the stock market and housing markets.

        • Tom Pfotzer says:

          That’s what they’re doing, yes indeed.

          Now let’s answer the question of “why”.

          Are we going to fall back on the “Fed is in biz to support 1%” answer, or are we going to look a little deeper?

          Fed is pumping new cash into a system that only gets a few “turns” (econ activity involving 99%) then it gets drained off and warehoused into assets, incl USG bonds which are (static money) owned by the 1% or by Fed.

          What’s Fed, or USG, or anyone else’s alternative plan? The 99% are rapidly becoming superfluous to production, e.g. Not Necessary. Do you get it yet? Not Necessary. No role.

          That’s why the new money creation. Fed even tried direct-injection to 99%. Major distortions, short-term fix, can’t continue. Trying to keep the 99% involved and fed.

          So what, my friends, is YOUR alternative to the core economic problem of ALL developed/developing economies, world-wide?

          A small group of people are capturing all the wealth / cash flow, and it’s because the 99% can’t figure out a way to be economically relevant / competitive with the top dogs (1%).

          There is the economic problem. All the rest of the effects are dependent vars, not independent vars. Low interest rates, gov’t policy favoring rich, etc….. all dependent vars.

        • Depth Charge says:

          The FED is producing homeless people at the highest rate in history. They are lowering the standard of living for everyone except the top 1%, and ultimately that will be the top .1%.

      • Resjudicata says:

        The evidence tells me that the feds #1 goal is to prevent Great Depression 2.0 regardless of any mandate. It doesn’t care about any particular group or entity. I seriously doubt it liked liar loans, airline share buybacks, or junk bonds any more than we do. But any industries that risk deflation contagion that could cause GD2 will be bailed out to save the system. The evidence also tells me that there is zero appetite for pain at the federal level from either the fed, gop or dems. Similarly if prices stop going up and deflation scare rears its head the fed will step in to reinstall confidence that prices will keep going up and it will buy whatever it needs to force prices to continue going up if necessary. And they will go on TV and tell you openly like they did this time last year that they are “committed” to using “all tools necessary” to ensure the system stays together; ie more debt and higher prices in perpetuity. The difference between this time and 2008 was the speed at which they moved. If 2019 were allowed to have played out we probably would have had a slow rolling recession that the fed would have responded to gradually, which would have provided a long period of good buying opportunities. Instead COVID forced a quick recession and gave both the fed and fed gov the cover they needed to act immediately and even go way overboard. The result was a greatly shortened recession. Now we’re on the other side of it and a new economy has once again formed around the feds “temporary” tools and they are trapped. They will not take their foot off the accelerator unless there is significant sustained inflation. I don’t think we’re seeing that yet. Sure some prices are up and some of that will stick and the fed will be happy it forced up prices. But the rate of increase is likely to drop as balance is found over the coming year. That’s just my opinion and I could easily be wrong. We will see.

        • Depth Charge says:

          You’re way too impressionable. The FED cares about one thing – bankers. They are serving the people who own them.

        • Resjudicata says:

          We’re too far out on the reply line for me to respond directly to depth charge, but this is my response:

          The fed, the fed gov, the banks, and the entire system are in a symbiotic relationship. A buggy master feeds, water and trains his horses, but that does not make the buggy master the servant of the horse.

        • RightNYer says:


          If these “tools” (which are really just fancy names for money printing) were really so foolproof, why haven’t they used them before? Why hasn’t every society done so?

          Everyone is rich, no one suffers pain, win win!

          Could it be that there are negative externalities that only manifest themselves later?

          How late is “later?” Do we know? Can anyone know?

        • Jdog says:

          The Fed is not a US government agency. It is a private corporation, who’s shareholders are it’s member banks. It’s goal is to do whatever benefit’s its shareholders. That means keeping the ponzie game going as long as possible, and when it can no longer keep it going, making sure its member banks are in a position to profit from the crash just as they did the bubble.
          The member banks were taken by surprise in 2008 and not in position to profit from a crash, so the crash was not allowed to happen, the tax payer bailed out the banks.
          They have since changed their overall positions, and are now not in danger of insolvency when the crash comes…
          The Fed knows the crash must come at some point, it just wants to make sure its shareholders are ready.

        • Wolf Richter says:


          The Fed is a hybrid organization:

          1. The Federal Reserve Board of Governors is a government agency, and its employees, including Powell, are government employees with government pensions. You can see that by its .gov website:

          2. The 12 regional Federal Reserve Banks are private corporations, whose shareholders are the financial institutions in their districts. And you can see that by their .org websites, for example,

        • Resjudicata says:

          My response to RightNYer:

          The “tools” are things designed to increase asset prices. The system requires increasing asset prices. If that stops the system dies. The fed has been using these “tools” at every downturn for over 30 years. The Greenspan put was dropping rates. Bernanke hit zero and started QE. Yellen (no new crisis in our lifetimes) is a moron fit to be Biden’s treas sec. Powell tried to go back to normal, but quickly found out he couldn’t. When his crisis showed up he pulled new, and probably illegal, tricks. When the next crisis shows up they’ll do even more, if necessary. The feds not nearly out of ammunition. They’ll literally send every man woman and child a million dollar check before they give up.

          No one thinks these “tools” are foolproof. In fact anyone with any sense is seriously concerned. We hold cash reserves for a rainy day but we continue to play the game under the rules set by the rule masters.

          CPI and PCE are pitchfork gauges. The 99% won’t do anything as long as the beer and pizza flows. As long as these measures don’t go up significantly and continuously, disproportionately to wage growth, people will whine but won’t do anything crazy.

          It’s clearly all going to end in catastrophe eventually, but probably not anytime soon. All systems eventually die, but I don’t think this one is anywhere close.

        • Jdog says:

          “The Fed is a hybrid organization:”
          The key issue here is accountability. “Real” government in a Constitutional Republic is accountable to the people. Power comes from the people with their consent, it is not usurped and unaccountable.
          Not only is the Fed Board of Governors not accountable to the people, it is not even accountable to Congress or the President.
          That is not government, it is tyranny.
          The Regional Fed is a corporation, and the Board of Governors serves them, and not the people.

    • historicus says:

      “2008 taught us a deflation lesson. We were very frugal 2008-2019. ”
      Just a side note….CPI went from 214 to 254 , up 17% in that era..
      That was not deflation.
      Inflation getting seriously our of control is right here. Talk to anyone who buys tangibles, building materials, etc.
      When Joe six pack takes to pitch forks and torches, when the currency loses its international status, and this can happen very very quickly, the entire game may change.
      In 2018, the Fed attempted to return rates to normal, ie equal to inflation. Those levels were circa 2%. The Dow shed 5000 pts (26K to 21K) in a few weeks. Trump jawboned Powell, and he hasnt been the same since.
      The Fed’s QE and MBSs program is artificial support. How long?

  24. Nathan Dumbrowski says:

    Personal game plan is to be frugal as possible for the next year. Wait and watch with plenty of dry powder to be prepared for whatever is being decided in private by the smartest guys in the room at the FED

  25. Gary Yary says:

    Instead of worrying about losing money to inflation, work the minimum amount necessary

    The ZIRP zero interest thing is my main irk. All savings should be treated like a TIPs bond.

    1982 my wage was $3.35/hour.

    Why not wage a war against inflation vs. bailouts of the inept? It would be interesting if that $3.35 per hour would still be enough today. And a new car at $4,000.

  26. It’s obvious cash is trash. Even the banks want to offload theirs to the Fed for slightly less toxic treasury paper. Profits from spec in crypto is running up prices, (or what people are willing to pay) and then government jumps in the pool. Does anyone imagine the economy will not be materially different after we add a couple of zeros to the cost of everything? If they don’t keep the cost of basics low (people who can’t afford crypto) they will have a real pitchfork revolution on their hands. Anyone remember the 70s when they started selling generic products out of warehouse stores? If you are in cash, or you are a Republican you need to do a gutcheck.

    • drifterprof says:

      Okay, cash may become trash, I don’t have the knowledge an ability to evaluate.

      But it seems like cash is not trash right now. For example, given that the total household debt, Q3 2020, was about $14.35 trillion, it seems like people would be paying off their debts with some of that trash.

      • Jdog says:

        Trash? Compared to what?
        Compared to signing a mortgage, that with 30 years interest equals 50% of you total life earnings, for a 1958 poorly built ranch which should have been torn down 10 years ago? And will have ever increasing costs to maintain for as long as you own it?
        Compared to a stock that is selling for 60 to 90 times earnings, based on fictitious earnings and voodoo book keeping?
        Compared to a digital currency that really does not even exist?
        Compared to a vehicle that depreciates faster than a speeding ticket?
        Sure put all your money in “assets”, and sleep well at night….

        • Phoenix_Ikki says:

          60 to 90 times earnings would be consider a bargain, must not be talking about Tesla. Funny how everyone talks about cash is trash, to a degree sucks to have it depreciate in real time because of inflation but let’s see if people will saying cash is trash if any of the asset class has a major correct, heck not even a major one, let’s say 15-20% in one year..perhaps then cash is not as trashy as before, just sayin…

        • Turtle says:

          It’s strange that people are more worried about cash losing its value than stocks or real estate. Inflation is a concern, yes, but ask yourself which assets have been pumped up artificially to shocking levels during the past year.

          Nobody will be saying cash is trash during the next correction.

          Stay diversified,


      • historicus says:

        Cash is only trash since the Fed has broken the “normality” of interest rates.
        For the entire 20th century and until 2009, Fed Funds equaled or exceeded inflation.

        So, if that normality was in place (as Bernanke promised we would return to once the emergency was over)…. Fed Funds would be over 3%… wouldnt be “trash” then would it?
        So, cash being “trash” is a DECISION by central planners. And as Hayek noted, “when central planners decide, they intentionally harm one group at the expense of another.”
        So in my mind, cash being “trash” is a decision to make it trash, by the Fed.
        The Fed has Fed Funds 4% below inflation….neve happened before.
        The Fed buys MBSs …pushing the 30yr mortgage below current inflation…
        The Fed, the Fed, the Fed….not the free market…not free market forces in play.

        • Not to overthink this, there are a limited number of assets, on a planet moving toward 10B, and an unlimited supply of cash. The stock market is the best CPI indicator. The policy of shifting labor costs to lower standard of living countries is a one off. Bitcoin will end forex before forex ends itself. A chicken is a chiken.

    • Michael Gorback says:

      It’s not obvious at all. Arguably we are experiencing price-level adjustment due to an economy reopening in the face of several supply constraints.

      I know a lot of people discount the significance of money velocity, but if you look at a long term chart it has been dropping like a stone since the 90s and is now lower than during the Great Depression.

      Also note that the big WTF spike in consumption is is durable goods. Services are trailing. However, the economy is usually 70% services. So when people are done buying cars and appliances and this ratio normalizes, where will the inflation be?

      Monetary expansion doesn’t matter if the money doesn’t move. As I’ve said repeatedly, a lot of QE money never made it into the economy. If you print a trillion dollars and hide it in the basement it has no effect.

      However, debt does have an effect because debt reduces savings.

      Physical investment requires saving out of income. Without it you cannot get growth in investment. Without growth in investment, the standard of living stagnates.

      Net national saving has trended downward for at least 4 decades and is now close to zero. Much of this is government deficit spending but private sector (household and corporate) is also down.

      What about wage inflation? We just saw that as long as the federal government hands out free money, there will be upward pressure on wages. You can’t compete for labor against someone who can print money. If this helicopter drop stops and people re-enter the work force the increased supply of labor pursuing jobs will suppress or depress wages, especially among the low paying segment.

      So if the inflation narrative holds cash may be trash, but if it doesn’t (and I think the net national savings rate decline is the defining factor here) you could see disinflation or deflation. There have been 5 major debt bubbles in the last two centuries. Three ended in disinflation and two in deflation.

      If the Fed buys into inflation and lets rates rise and they’re wrong, you will LOVE your cash because they will precipitate a recession.

      • Tom Pfotzer says:

        Lot of really good comments on this thread, guys, and this is surely one of them.

        I’m seeing evidence of more and more comprehension and clear articulation of the situation every day.

        Cat’s gettin’ out of the bag.

        Wolf, keep it up. Great service to the public.

        • historicus says:

          Why is wealth being concentrated?
          People who have the ability to invest were the ones served by the fake interest rates for the past 12 years.
          Just like the housing market now… is not there….people who have homes are saying “I dont know what’s going on, but I’m staying put.”
          So those WITH the assets have been waking up and saying ..”Hey honey, is the market up again today?”
          While those without can’t even scrimp and save lest they go backwards due to fake interest rates and an Inflation, promoted by those (the Fed) who are supposed to fight inflation… they are stuck.
          Generations have saved their way out of poverty in this country, getting a fair return on their money. For nearly the entire 20th Century and until 2009, Fed Funds equaled or were in excess of inflation. If that were still true, Fed Funds and returns on savings/CDs etc. would be circa 3%…OR MORE!
          The Fed changed the rules…..and some were in a position to know it and be assured of it.
          I believed Bernanke when he said QE was temporary until things returned to normal. Shame on me.

      • historicus says:

        “There have been 5 major debt bubbles in the last two centuries. Three ended in disinflation and two in deflation.”

        Last 200 years? How many in the last 90 years?
        Deflation is a myth ..especially since the Fed has become a new “monster”.
        Regarding the velocity of money…
        the denominator in the calculation is the money supply….and the tremendous surge in that level…(M2 up 27% in less than a year for example) makes pushing velocity up a mathematical challenge.
        Additionally, as the wealth in this nation becomes more and more concentrated, the velocity will drop.
        Wealthy people can only indulge themselves to a limited degree.
        Velocity speaking, it is better to have 100 millionaires rather than 2 people with 50 Million.

        • Tom Pfotzer says:

          Yes. Concur.

          See my comments above, Historicus. The question is Why is wealth being concentrated, and what can the 1% do to reverse the concentration?

          Re-distribution of wealth? Riots, taxation, theft, etc. are emotionally rewarding in the short run, and do nothing to address the long-term root cause.

          How do you re-distribute wealth-earning capacity (not the wealth, that’s the effect (the “egg”). The capacity to earn/create wealth is the “goose”.

          Let’s get zeroed in on where the potential for real change actually IS.

        • Jdog says:

          Deflation is not a myth, it happens, it just happens for short violent periods. Those periods, and behavior leading up to them, make the difference between people who make long term wealth, and those who loose what they accumulated during bubbles.
          The people worried about loss of income keeping cash under times of inflation do not understand the game.
          The true value of cash is it gives its owner the staying power that 99% of the population does not have. Most people make scared money decisions, on both sides of the equation. They make FOMO decisions in good times, and then loose most of their wealth when times turn bad and they do not have the staying power to ride it out the bad times.

        • Michael Gorback says:

          Deflation is not a myth. It happens. Or was the Great Depression a myth? That was . . . Less than 90 years ago?

          Black swans aren’t as rare as you think, and you should look at the analyses of Lacy Hunt, David Rosenberg, and Cathie Woods, who present arguments for possible deflation. I’m not using them as an appeal to authority, just saying try to broaden your reading list.

          FWIW, Lacy Hunt is an intractable math guy. Over the years he has been attacked for his predictions but he almost always wins because (as I firmly believe) you can’t outrun the math forever.

          Hunt is the guy behind the thesis I cited about the net national debt. Who else is talking about that? Nobody.

          Has anyone here mentioned Rosenberg or Cathie Woods in ANY discussion?

          No, just a big echo chamber about inflation. When everyone is on one side of the boat what happens to the boat?

    • Depth Charge says:

      “It’s obvious cash is trash.”

      Oh, really? Put yours in a trash bag every day and I will happily show up to your residence and collect it. No? Hmmmph.

  27. Mendocino Coast says:

    Soring Food Prices : extreme Example
    Lebanese pound lost almost 90% of its value in 18 months
    Pound’s fall has led to soaring food prices
    extreme example
    Somehow this makes me think of what all this could lead to
    BEIRUT — Lebanon’s currency hit a new low against the dollar on the black market Tuesday, continuing its freefall in a country gripped by political deadlock and an economic crisis.

    The latest plunge means the Lebanese pound has lost almost 90 per cent of its value on the informal market in just 18 months.

  28. Tom Stone says:

    It’s no surprise that the stimulus money was spent so quickly, it was either “Cool, I’m bored and now I can buy a few toys”.
    “Do I fix the car, get braces for the kid, buy needed clothes and shoes, perhaps replace a broken washing machine or water heater, pay medical bills…”
    Desperation spending by the millions on the edge financially.

  29. WyleeEconomist says:

    Wolf, in a recent podcast you said you thought Silver & Gold had already priced in inflation…

    Gold & Silver seem to be forming a cup, and silver is the most significant industrial commodity not to rise in the triple digits in the last last year… Plus we have Basel III coming for the 2nd half of 2021…

    Do you still think inflation is already priced in?

    • Wolf Richter says:

      If I recall correctly, I said that they had a really good run over the past two years. So if something is up 50% over that time frame and you expect 6% inflation (CPI), you already got a lot out of your hedge against inflation, a lot more than a normal hedge against inflation would offer, so I wouldn’t rely on inflation to power the next big move unless inflation (CPI) gets to be in the double digits.

      • Depth Charge says:

        Which is why I am done buying precious metals. At one point, 10% of my net worth was in silver and platinum. Now it’s down to less than 5% (I haven’t sold, I’ve just been saving cash) and I will not be buying any more. I could see the metals actually falling for a number of reasons.

  30. YuShan says:

    The MMT crowd said that when inflation starts running hot, you simply raise taxes to get the excess money out of the economy. I guess that is now!

    Let’s see if they are going to live by their own rules (I’m not holding my breath).

    • Michael Gorback says:

      What happens to politicians who raise taxes?

      This is like the perversion of Keynes. He said run deficits when time are bad and pay it back when time are good. Somehow that became “run deficits all the time” in the halls of Congress.

      So if MMT takes hold and they print money to fight a weak economy, do you think they’ll raise taxes when the economy gets hot?

      • YuShan says:

        Of course they won’t. That’s why I never believed that crap. They are basically saying that you should raise taxes when you get stagflation. Of course that won’t happen!

  31. yxd0018 says:

    Wolf, what do you think of the forecast from a top economist in China:

    real rate US10YTIP = 10-Year Inflation expectation (T10YIE) + nominal 10y yield + gold

    it can be judged from the logic of the current nominal interest rate consolidation that gold is currently in a rebound period. Looking ahead, based on both China and the United States are controlling the risk of relative supply shortages, which alleviates the “risk of uncontrollable inflation.” With the withdrawal of fiscal policy stimulus, the seesaw balance will begin: the fiscal is in, inflation expectations are strong, and the unemployment rate is high, and the FED cannot move; but when the fiscal retreats, inflation expectations are high, the unemployment rate is falling rapidly, and the FED is expected to accelerate greatly; Looking at the next three to six months, my expectation is that the high level of inflation expectations will not go further, but will gradually ease, and the nominal interest rate may be expected to advance as employment accelerates, which will promote the second acceleration of real interest rates; I am I am happy to do a put option of gold for the next six months in 1900.

    • historicus says:

      “a top economist in China”

      That is a curious reference

    • Lisa_Hooker says:

      A little more information would be helpful. For example: would you buy or sell that put option? Or both? You remind me of when I was “done” by a broker, long ago.

  32. Daz says:

    On the bright side Americans will learn the true value of what is needed and what’s just wasteful spending. Ever since the last crash it seems Americans have been on a spending bender and now we’re about to suffer a major hangover.

    • MonkeyBusiness says:

      We will attack China and make sure they sell cheap stuff to us forever!!!

      What hangover?

  33. Micheal Engel says:

    1) The commodity index $CRB is up since Apr 2020 low. CRB was in a downtrend for a decade. Apr 2020 low is a selling climax (SC).
    2) CRB false positive bias is an automatic response (AR). A test will follow, probably a lower low, because the downtrend was so strong.
    3) The large pool of black market workers, the illegal, and idle people out of the labor force, will prevent wage inflation. Workers on zoom got no/ little raises.
    4) The Labor Force Participation reached a buying climax (BC) in Jan 1990,
    an UT in Mar 2000. Since then, for a decade the trend is down. Recession will send it further down. The current correction is a thud.
    5) Higher steak prices and less restaurants protect people from health problems. When Germany invaded Norway they stole all the cows. Heart attack cases fell sharply.
    6) The market imitate itself. The DOW registered three spikes up since Jan
    7) A sharp correction might be followed by X3 spikes down.

    • Jdog says:

      I do not know what world you live in, but in my town, every fast food joint and big box store has big sign begging for employees in the $20hr range and can’t get them… That means minimum wage jobs are paying about 250% of minimum wage….. That sounds a lot like wage inflation to me.

      • Micheal Engel says:

        1) The min wage > 250% min wage will cause restaurants and big box stores to go bk. This inflation bout will choke the recovery. It’s a dead cat bounce.
        2) NDX, the leader of the pack : take Sept 21 low to Oct 30 close. A
        parallel line from Oct 12 close. What might happen next :
        3) PnF to Jan or Feb lows for accumulation.
        4) PnF X3, 2pt for a bearish horn.
        5) A possible cause : the ME explode.

        • EUGENE says:

          Hi Micheal.What may hapoen to gold and BTC?I am trading since 1998 and it is stil an enigma for me.

  34. Michael Gorback says:

    You know what might kill restaurants? Portion size and substitution.

    I can’t prove it but my friends and I have all noticed a deterioration in the food quality when dining out and the portions also seem smaller. Meanwhile the prices are ramping up like crazy.

    It’s going to be a while before I go back to my pre-covid dining habits.

    • Swamp Creature says:

      This is good. Reducing portion size. Restaurants serve portions that are usually too large. About 60% of Americans could use smaller portions.

      • Michael Gorback says:

        You’re not going to make people thin by serving smaller portions at restaurants. They can order a nice piece of cheesecake for dessert or just grab a snack when they get home.

        A lot of people already addressed the huge portion problem years ago this by splitting meals or just boxing up what they didn’t want to finish.

        What’s repellent is charging MORE for both lower quantity and quality.

      • Lisa_Hooker says:

        I very much dislike taking home smaller portions.

    • Jdog says:

      I have been underwhelmed with the restaurant experience now for a few years. I cannot remember the last time a restaurant impressed me…

    • Nicko2 says:

      Dining out over the past year has just been a huge disappointment. Thankfully, due to the pandemic, we’ve become better cooks. Nothing like BBQing your own meat, and eminently cheaper. Invest in a quality BBQ!

    • historicus says:

      I agree.
      Restaurants seem to be a big short opportunity … higher food costs, higher employment costs…
      but for now, everyone thinks the great return will go on for a while…
      keep an eye on it..

      • Michael Gorback says:

        One of my favorite restaurants went under recently. Pre-covid it was booming.

        I thought relaxation of covid restrictions was supposed to make them profitable.

        Fat tails, black swans, and “what is unseen”.

  35. Micheal Engel says:

    8) $CRB in A-B-C down since 2008. Wave C, since 2011, have X5 legs down.

  36. Michael Gorback says:

    Another awesome yet depressing interview with Jeff Gundlach. He really didn’t have any blockbuster ideas about where to put your money. He did point out that currently earnings yields exceed bond yields so that supports high stock valuations. Yet another reason the Fed will keep rates low (if they can).

    He discusses UBI and wealth taxes. As we’ve seen, Pelosi and Schumer want to make stimulus checks permanent. Inflation might always be a monetary phenomenon but politics is the root of hyperinflation.

    Wealth taxes sound to me like property taxes and Gundlach appears to agree. The tax assessor assigns a value to your property and you have to fight it.

    In Texas we have no income tax, just property tax. I’m currently contesting my property assessment, as are many in my area. If they want to increase tax revenues they just raise the valuation on your property. The elected politicians can just shrug their shoulders and say it wasn’t them.

    His predictions for the future of middle management white collar jobs is at the very end of the video and it’s not pretty. But maybe, just maybe, in a fantasy world in a parallel universe the administrative bloat in higher education and health care might be exposed for what it is.

    So far I haven’t seen commentary anywhere on how robots will replace humans if there’s a chip shortage.

    • Tom Pfotzer says:

      Here’s my comment: chip shortages will get fixed by normal market activity. If there’s money to be made, those shortages will get addressed, proto, and usually over-addressed so there will be chip glut in 1-2 years.

      A non-issue.

      • Nathan Dumbrowski says:

        The chips will be made stateside for 10x the cost of doing it offshore in 3-10 years. And then the price all of the devices that are using them will suffer an increase in cost. That also has to due with the Billion dollar costs to build these new fabs. So yes it will have a component made in America at the cost to produce in America

      • Michael Gorback says:

        Not a non-issue if you believe industry predictions that it will take 2 years.

    • Heinz says:

      “If they want to increase tax revenues they just raise the valuation on your property.”

      In these parts they accomplish the same by raising the mill levy rate to hit the revenue target of their local jurisdiction’s budget forecast.

      • tom21 says:

        They pay to much attention around here on Mill rate.
        They proudly announce the mill rate remained the same.
        All cheer….until the tax bill shows up. Rinse & repeat.

        GFC changed that for a few years. A fee for this…a fee for that..
        and they covered the revenue losses.

    • historicus says:

      I suspect the Democrats will promote “INFLATION COMPENSATION” checks…some day.
      That’ll fix it….and solidify their lack of economic knowledge.

      • Michael Gorback says:

        Exactly. That’s why hyperinflation is a political result, not a monetary polucy result.

  37. Blowing Big Bubbles says:

    me murmuring: deflation, deflation, defl….
    In 3-5 months, everyone will be hollering what I am murmuring…

    • Wolf Richter says:

      Blowing Big Bubbles,

      Not “hollering” anything. Just pointing out what is ALREADY here, actually in April, showing up even on the lowest lowball inflation data we have: core PCE.

      You, on the other hand, are trying to persuade me with nothing to back it up that in “3-5 months,” consumer prices overall will suddenly drop and create consumer price deflation.

      In my entire life, there have only been a few quarters of mild consumer price deflation. The rest of the quarters of my life, inflation reigned, including lots of double-digit inflation.

      • Jdog says:

        Real across the board deflation only happens in severe circumstances. That being said, every action has an equal and opposite reaction.
        While consumer inflation may not be severe in the time periods you mention, asset prices are another story.
        In the event we do have a serious enough correction to induce real consumer deflation, the effect on asset prices is going to be catastrophic. While these episodes are usually short lived in comparison to the inflationary periods, the damage done in terms of money and wealth lost is harsh.

      • Michael Gorback says:

        Come on Wolf. That’s inductive logic. Just because you haven’t experienced it doesn’t mean it can’t happen.

        I think we’ll have a better idea this summer whether it’s a temporary price disruption or a trend. Acting too soon could cause a recession.

        The wild card is if idiots like Pelosi and Schumer continue stimulus checks. They have actually discussed making them permanent. Then you’ll see inflation that could rival Zimbabwe or Weimar. “Oh you can’t afford the increased prices? Here, have some more free money not backed by increased productivity. See you next week after the ink on the next round of checks dries”.

        Crypto will explode if they do that just to get out of fiat currency. Especially businesses like Kinesis that (allegedly) trade stablecoins backed by gold and silver, or DeFi where you can create stablecoins backed by gold and silver (or copper, palladium, rhodium, lithium, farm land or whatever). They will blow the doors off of fiat currency.

        So will physical PM. Wow, imagine if Comex traders actually stood for delivery. Total implosion of Comex.

        So there are two possible causes of continued inflation: whatever economic mechanics are currently in play (and which nobody can explain) or idiotic politicians.

        If we have to have inflation please let it be economic and not political.

      • Michael Gorback says:

        BTW, did you see any deflation while you were in Japan? ;-)

        • Wolf Richter says:

          I saw lots of things in Japan that I NEVER see in the US, including the dominance of mini cars with 650cc engines, immaculately clean subways and trains, a trade surplus, a rapidly declining working-age population, and the fastest GDP growth per working-age person in the developed world. Japan is NOT the US.

        • RightNYer says:

          Not to mention trains that run on time, people who take pride in their work, even at jobs like cashier at fast food restaurants, and virtually zero crime.

        • Swamp Creature says:

          Swamp’s Observations from Japan

          360 Yen to the dollar in the 1970s

          Great motorcycles

          cab drivers driving on the wrong side of the road and passing on the right side.

          Women cleaning the streets in Tokyo at 11PM at night.

          All the kids in uniforms and quiet and behaving themselves.

          Great subway system.

          Treating Americans well.

          Everything was so orderly .

          Food was great, meat was very expensive.

          Great weather in the fall

          Shinjaku district pub had sing a long for America tourists

    • historicus says:

      When have you ever seen DEFLATION?
      A pause in INFLATON is not deflation….just like a down week or month in stocks is not a bear market.

      • Jdog says:

        I have seen it many times in my life. I have seen the value of real estate drop in half. I have seen bankruptcy driven sales dumping goods on the market at fractions of their former costs. I have seen equipment at give away prices because there was no market for it.
        I have seen commodities go from record highs to below the costs of manufacturing. It may not be a permanent phenomena, but for the time period it lasts, it is very real, and very destructive.

      • Michael Gorback says:

        “When have you ever seen DEFLATION?”

        Um . . . Japan since the 1980s?

  38. Turtle says:

    If anybody wants a good chuckle, search Bitcoin on Twitter. It’s comical the things “investors” are saying to comfort themselves right now.

    Now why it is that they always say “buy the dip” but not “sell the peak”? Apparently their crystal balls are one-way only.

    The hype machine is spinning its wheels fast but gaining traction at the moment seems to be an issue. They’re probably praying to St. Elon right now.

    • Depth Charge says:

      There’s a BitCON shill on Youtube who has been adamantly and vociferously claiming that it’s going to $300,000 by Christmas. What’s funny is that when it fell after the last bust in 2017 he was depressed and in the dumps, questioning if he made a mistake buying it in the first place. I know this because I went back to watch a couple videos of his from that time frame to listen to his tune back then.

      Once it shot up to $40k and beyond, his demeanor was almost like a kid on a sugar high. His speech was fast, he was talking about being “Bitcoin retired,” and acting like he was the smartest guy in the world. Then, when it recently fell to $30k, the doubts started creeping in again. His speech is slower and more subdued, and he admitted he never sold any at the peak. He said that he had considered selling some but was grumbling about the IRS and taxes.

      Then he started talking about how it’s going to go up again and he’s just holding. He is so greedy that he’s going to ride it all the way down. I look forward to the day it’s down below $10k and he never sold any. Greed is a powerful thing.

      • Brent says:

        Q: In a bacon-and-egg breakfast, what’s the difference between the Chicken and the Pig ?
        A: The Chicken is involved, but the Pig is committed !

        Elons & Goldmans of this world can afford to lose a couple of $$$BBBs when BTC crashes.

        If everything else fails they will make it tax deductible.Not $3000-per-year tax deductible losses IRS allows us mere mortals,it is no-holds-barred tax deductible & too-big-to-fail bailouts for them…

        Now put yourself in place of two-bit “investor” who spent his rent money on 0.00001BTC just before the crash.

        How would YOU feel ??? ☺

        • historicus says:

          great analogy, metaphor.

          Those in the government, like the Congressmen and more specifically the Federal Reserve ( quasi agency)…..all have inflation protected futures awaiting due to pension inflation protections….from us.
          But what of us?

        • Brent says:


          If the History is any guide our future is bleak.Last Roman Emperor Romulus Augustulus was forcibly retired to Ravenna and killed there.Because Barbarians did not believe in paying pensions,even to former Emperors.

          Meanwhile Roman Senate behaved as if nothing happened.Last Roman Senate public records are dated 603 A.D.

          Most like they eagerly discussed some non-issue like Visigoths Lives Matter.

  39. Micheal Engel says:

    1) There are all kind of bubbles. Bitcoin, or Picasso plunge will affected only few investors, not the whole economy.
    2) Commercial property plunge is worse than a stocks market bust.
    3) In the 1990’s, Japan had both commercial and stock market bust. They
    occur in assets that are widely held. Large number of people suffered
    when the bubbles burst. That’s why Japan never recovered. Thanks Jim Baker.
    4) Bubbles need backbones to rise on. For them to inflate, they need more and more people to invest.
    5) When nobody is left, or because some external “event” bubbles stall and deflate.
    6) On the left hand side of a bubble, few nimble investors made a lot of money, on the way up.
    7) On the right, a lot of people, with no fault of their own, who don’t understand what’s going on, will suffer.
    8) When the min wage inflate > 250% of the min wage, more stores and small business will deflate.
    9) In a BK bubble there are less jobs opening, lower participating rate and higher gov debt.

    • Michael Gorback says:

      That’s one the few posts you’ve written that I mostly understand, at least up to and including #7. After that I got lost, but up until then I agree, as do those who believe in the Austrian business cycle.

      There is no graceful escape from the unwind of a credit bubble.

  40. historicus says:

    “Commercial property plunge is worse than a stocks market bust.

    and worse than that, a collapse in the debt market…it becomes geometric.

    • Putter says:

      Once the bond market bubble bursts, (for every action there is an opposite and equal reaction), assets will reprice MUCH lower. Banks will vaporize. Similar to the 30’s, their will be Bank Holidays, while they try to salvage this shitshow. Welcome to the “Decade of Fear and Loathing”

  41. J-Pow!!! says:

    Hahahahahahah!!!!!!!! I am robbing everyone!!!! And they don’t even know it!!!!!!!! I am so clever!!!! Hahahahaha!!!! Things will go back to normal once I am done robbing you!!!!! Hahahahahahahahahaja!!!!!

  42. TheFalcon says:

    So what are we talking about? High inflation? Bordering on or already in hyperinflation depending on the product?

    Is anyone arguing that this is going to continue endlessly and not result in:

    Higher interest rates
    Rising unemployment
    Economic and personal malaise
    Rising anger and mistrust of “leadership”
    Rise in crime and poverty
    Wealth destruction

    The story of the virus and it’s impact? It’s going to be a multi-volume set and we are reading Book 1 Chapter 1.

  43. Micheal Engel says:

    1) Kingstone Trio : where have all the bubbles gone : to the graveyards. When will they ever learn. When will they ever learn.
    2) SPX closed @4,200. // !GAAPSPX = 94.15.
    3) !PESPX = 4200: 94 = 44.7.
    4) In Mar 2020 SPX was undervalued. Today high price don’t matter, but when P/E = 44.7 ==> it’s a bubble.

  44. SpencerG says:

    The biggest problem that I see with all of this is that the current Administration seems to truly believe that inflation will be “temporary” or “transitional.” Like generals who always want to fight the last war, the Biden people seem to think that because inflation didn’t rear its ugly head from 2009 to 2011 despite the Obama Stimulus Bill’s spending that it won’t do so this time either.

    I get that the political types would fool themselves into thinking that. But I am really surprised that Janet Yellen seems to have done so as well. Inflation… once it gets going… is very hard to stop. Particularly if the government is still throwing cash onto the bonfire. If Obama’s stimulus spending showed us anything, it is that the government has a hard time spending money quickly… even he joked that the “shovel-ready projects” really weren’t.

    So we have an economy awash in cash (as Wolf’s charts show) that would probably recover on its own simply from reopening… but instead we are going to throw LOTS more cash on top of that process as well. What does Yellen thinks will slow inflation down? This isn’t 1979 when Paul Volcker’s Fed could raise interest rates by a full point and change the entirety of their approach to the economy on a Saturday night without any advance warning!

    Compare Volker’s famed “Saturday Night Special” with Yellen’s own approach to Quantitative Tightening just four years ago. Yellen (and Powell) couldn’t make a single move without signaling it MONTHS in advance. I don’t even think that Volcker’s FOMC had to publish an announcement of what they were going to do with interest rates AFTER a meeting… much less signal it in advance or provide the detailed minutes (including the dissents) afterwards. The markets had to divine it all from what they saw develop after the meeting decisions were implemented.

    Raise interest rates by SIX POINTS (50%) in a single meeting (like Volcker did in November 1980)??? Fuggitaboutit! That cannot happen these days. So what does Yellen think is going to slow inflation once it takes root?

    • historicus says:

      ” the current Administration seems to truly believe that inflation will be “temporary” or “transitional.””

      Only if you believe them. The federal govt has lost credibility, from the FBI to the BLS inflation numbers…IMO.
      They are inflating away the debt, or trying to….

  45. Auldyin says:

    This is always the ‘magic moment’ for inflation.
    If the Govt lets this 3% drop in ‘real’ income kill the demand in the economy, the Fed’s ‘transitory’ prediction could possibly come true and have been planned for.
    But, but, but, if they step in yet again with spending to re-boost demand and restore ‘real’ wages, you are off to the races. Falling ‘real’ income is another way of saying that the US is getting poorer as a country.
    UK knows all about this and now seems again to be on a similar path but with generally lower numbers.

    • MonkeyBusiness says:

      With less than 5% of the world’s population, the U.S. consumes 17% of the world’s energy and accounts for 15% of world GDP.

      Don’t worry, we still have ways to go before we stop getting poorer.

      • Auldyin says:

        My great-great grand-dad said that about the UK when we had the numbers you quoted.
        That was 100 yrs ago, so you’ve still got lots of time.

        • p coyle says:

          it will be, most likely, measured in years rather than weeks.

          and like most historical comparisons, will depend on when you start counting and when you stop.

          then there is always the “slowly at first, then all at once” thing that happens when you go bankrupt.

          again, i guess you have to know when to start paying attention. buy low. sell high. easy peasy.

  46. Marbles says:

    Excellent back and forth comments. Better than I could do. I will add, that the Federal Reserve, or even any person is not infallible. The day will come, hope I am ready if it happens in my life time.

  47. Swamp Creature says:

    Inflation affects everyone differently. Luckily we are not as affected as most people.

    Other than rising medical expenses nothing has changed in the last 10 years. Examples:

    Food Inflation – for people who don;t eat a lot of red meat prices haven’t budged in the last 2 years

    Housing Inflation – If you own your own home and paid off your mortgage then you’re not affected by the rising prices of houses.

    Vacations/Hotels – We don;t take expensive vacations. Mostly Staycations. Not affected by hotel price gauging, rentals etc.

    New car prices – We drive a 20 year old low mileage Toyota Corolla and 17 year old Subaru Forestor. No loans on them. Minimal maintenance.

    Gas Prices – We stay close to home, Gas prices for our business are tax deductable. If they doubled I could care less.

    Home repairs and maintenance – Did all the big items many years ago. Most routine maintenance items I do myself.

    Federal Annunity – Adjusted yearly with COLA.

    A lot of people don’t have the same situation but a lot of the problems I hear people complaining about are due to poor planning, over consumption, and irresponsible behavior.

    • RightNYer says:

      “Housing Inflation – If you own your own home and paid off your mortgage then you’re not affected by the rising prices of houses.”

      Yeah, what good does that do for the 28 year old, newly married couple, just starting out and hoping to have a baby in a year or two? Even if you accept the rest of your points, housing is by far the biggest expense for most people.

      Asset inflation only helps those who currently own assets. Period.

      • Swamp Creature says:

        House price inflation doesn;t do squat for me either. It’s just a number on a piece of paper. Still the same $35K house it was in 1951 when it was built. Taxes and maintenence going up. So no net benefit. It’s a fools’ gold.

    • Auldyin says:

      I hope your ‘green’ politicians don’t outlaw your old Corolla & Forestor and make you go EV! That’ll dent your budget big time with no used options.

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