Up the Price Pipeline, Inflation Rages at 20%

Producer prices that are input prices for consumer-facing industries are red-hot. But further up the production chain, prices are white-hot.

By Wolf Richter for WOLF STREET.

We’re going to go step by step so you don’t get dizzy right away. The Producer Price Index for Final Demand – these are input prices for consumer-facing industries and are the next step up in the pipeline for consumer prices – jumped by 0.7% in August from July. This pushed the year-over-year increase of the PPI Final Demand to 8.3%, the biggest year-over-year jump in the data going back to 2010.

Prices for goods jumped by 1.0% month-over-month, including food up 2.9% (35% annualized), with meats up 8.5% (102% annualized), while energy rose 0.4%.

Prices for services jumped by 0.7% month-over-month, including a 2.8% spike in transportation and warehousing costs (34% annualized), reflecting port congestion, spiking container freight rates, backlogs, and general chaos in peak shipping season before the holidays.

The core PPI, which excludes the volatile food and energy segments – though food and energy make up a big part of spending for consumers whose income is on the lower portion of the income scale – rose 6.7% year-over-year according to the Bureau of Labor Statistics today.

If businesses are able to pass on those price increases – which they have been easily able to do this year because the whole inflationary mindset has changed – then they will end up in consumer price inflation, at which point consumers will encounter them.

While some prices that previously spiked have now been declining for a month or two, other prices that had risen more moderately in prior months, or had declined, are now jumping. The overall indices average out this game of Whac-A-Mole.

Further up the pipeline: Intermediate Demand.

Intermediate Demand comes in four stages by production flow, ranging from Stage 1 industries that are some distance up the production flow and create in puts for State 2 industries, to Stage 4 industries that primarily create the inputs for Final Demand industries, which create the inputs for consumer-facing industries.

Across all four stages of the production flow, inflation pressures were high, and these pressures will likely be passed on to final demand industries, and from there to consumers. We’re going backwards up the pricing pipeline of the production flow.

Intermediate Demand, Stage 4: +0.8% in August, with goods +0.9% and services +0.7%. Year-over-year: +12.1%, the biggest jump in the data going back to 2010. These industries create inputs for consumer-facing industries.

Increases in prices for meats; machinery and equipment parts and supplies wholesaling; metals, minerals, and ores wholesaling; structural, architectural, and pre-engineered metal products; steel mill products; and nonresidential real estate services outweighed…

Declines in prices for securities brokerage, dealing, investment advice, and related services; softwood lumber; and hardware, building materials, and supplies retailing.

Intermediate Demand, Stage 3: +1.0% in August, with goods +1.9% and services +0.0%. Year-over-year: +20.2%.

Increases in prices for steel mill products; slaughter poultry; metals, minerals, and ores wholesaling; industrial chemicals; corn; and slaughter steers and heifers outweighed…

Decreases in prices for television advertising time sales, raw milk, and softwood lumber.

Intermediate Demand, Stage 2: +0.4% in August, with goods +0.5% and services +0.3%. Year-over-year: +21.8%.

Increases in prices for gas fuels; industrial chemicals; steel mill products; machinery and equipment parts and supplies wholesaling; transportation of passengers (partial); and oilseeds outweighed

Decreases in prices for crude petroleum, television advertising time sales, and softwood lumber.

Intermediate Demand, Stage 1: +0.9%, with goods +1.3% and services +0.5%. Year-over-year: +21.1%, matching July.

Increases in prices for industrial chemicals; steel mill products; metals, minerals, and ores wholesaling; transportation of passengers (partial); building materials, paint, and hardware wholesaling; and structural, architectural, and pre-engineered metal products outweighed…

Decreases in prices for hardware, building materials, and supplies retailing; securities brokerage, dealing, investment advice, and related services; and diesel fuel.

The 4 stages of Intermediate Demand production flow in one chart.

Prices in the three production stages that are the furthest up the pipeline (Stages 1-3, red, green, gray) have all jumped by over 20% year-over-year. Prices at production stage 4 (black), up 12.1% year-over-year, are inputs for final demand prices, which are inputs for consumer prices.

Final demand prices are what consumer prices will encounter pretty soon in their consumer prices. Stage 4 intermediate demand prices will follow. And prices in productions stages 1-3 are further behind, but they’re true whoppers, and they will provide massive pressures on consumer prices for months to come:

These are the kinds of price increases that are now coming down the pipeline toward the consumer. With the current inflationary mindset – radically changed from the mindset in prior years – consumers, flush with free money, have been accepting higher prices, and companies are confident that they can pass on higher prices. And there is a good chance in this inflationary mindset that industries further up the production pipeline will be able to pass these price increases down the line all the way to the consumer, and that the consumer will pay them.

“We need lower consumer demand to give supply chains time to catch up… recover efficiency… and break this vicious circle”: CEO of Maersk’s APM Terminals, one of the largest container port operators. Read… The Everything Shortage & Price Hikes Plastered All Over Fed’s “Beige Book”

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  279 comments for “Up the Price Pipeline, Inflation Rages at 20%

  1. 2banana says:

    And remember:

    You serfs will make due with 0.0001% interest on your savings

    And a 1.5% raise.


    “Up the Price Pipeline, Inflation Rages at 20%”

    • Bead says:

      Look at the bright side: once cash is trash we’ll all be more equal. Everybody gets a prize. Keynesian heaven, digging holes and filling them up. Our betters fly to Davos to kvetch over populism and global warming, hopefully wearing their masks as they dine. Bernanke, Yellen, and Powell, they saved us all.

      • Beatrice says:


      • Joe Saba says:

        spoke with main plumbing supply house owner this morning
        he’s had 5(count them 5) price increases this year on WATER HEATERS
        now coming in at just under $600 each(not installed)

        last week(pre-sept) he was advised to put in his PVC order since they were increasing price on sept 7
        got their order in on sept 5 – when got confirmation he said it wasn’t same price as aug
        supplier said they had price increase on sept 1 and another coming sept 7

        another supplier said if you don’t pre-pay at time of order then you will pay price at time of delivery

        30-50% increases across board

        sure glad it’s transitory

        • joe2 says:

          “if you don’t pre-pay at time of order then you will pay price at time of delivery”
          Now that’s classic hyperinflation SOP.

        • VintageVNvet says:

          Million + $$ ”quotes”, ( each, ) for rebar, red iron, and fuel for large construction projects were good for 24 hours in 2004-6,,, and would almost always go UP if not accepted so this is typical of THE BUBBLICIOUS times so far this century, eh?
          Turned right around by early 2008, when similar bids were going DOWN daily if not hourly for same size projects materials.
          Just one more indication of the coming crash IMHO…

        • Thomas Roberts says:

          Lumber crashed first. I wonder what is next? I imagine some things will crash, before alot crashes at once. Some things will stay high indefinitely.

          Anybody got any guesses?

        • Wolf Richter says:

          By the time aluminum crashes, lumber will be spiking again :-]

        • sunny129 says:

          @ Thomas Roberts

          WOOD – etf for lumbar is now at $89.92 ( 62.31 – 98.98
          52 week range)
          Where is that ‘crash’ now?

          If EV vehicles are the future, watch out for Copper- demand recovering slowly!

        • Thomas Roberts says:

          We will see about lumber, alot of crazy things have happened for last 18 months.

          As for copper, while EV’S do use alot more of it, cars only make up a small percentage of copper usage, the number I found is that if 100% of passenger cars sold were electric, total copper consumption would go up by 22% in America. It will take awhile for all cars sold to be electric, so for next few years, it wouldn’t be enough to substantially increase demand or price. By then the amount of copper needed in EV cars might decrease or there could be reductions in other copper usage areas.

        • Wisdom Seeker says:

          @Thomas: Don’t forget all the electric grid upgrades that will be required if people shift entirely to EVs.

          The overall grid is NOT currently capable of supporting an “all energy is electric” economy. Just ask Louisiana (hurricane), Texas (Big Freeze), California (wildfires), New York (flooded)…

      • Aussie Mark says:

        If you want to FRACK something up get a Yank to do it. My understanding was that your greatest President Roosevelt was a Keynesian, he actually paid people to built stuff which is your greatest infrastructure build in your history.

        What you yanks pass for Keynesian now is give money to the banks to hand out to the 0.01% to invest in already built infrastructure to inflate price through company buy backs etc to make themselves richer, with M2 money at zero.

        OR start a war somewhere and hand all your money over to the industrial war complex, didn’t one of your president warn you guys about that?

        • CJH says:

          Yup. That’s the truth. Give money to the banks (owned by the oligarchs) who turn around and inflate the prices of their assets (stocks, bonds, property), without proportional increases in wages for the serfs, until commerce has a heart attack and inventories balloon and prices collapse. Then that old socialism is required to save the oligarchs.

        • Anthony A. says:

          Yeah, we be lookin’ for ‘nother war soon so we can fire up the war machinery plants. Promotes higher employment too! You guys need a bigger army. s/

        • Chris says:

          More war makes the USA go around

        • wkevinw says:

          Aussie Mark–“start a war somewhere and hand all your money over to the industrial war complex, didn’t one of your president warn you guys about that?”

          Actually a couple of presidents warned about that.
          Truman and Washington.

          From Washington’s Farewell Address:

          “… let those engagements be observed in their genuine sense. But, in my opinion, it is unnecessary and would be unwise to extend them.

          Taking care always to keep ourselves by suitable establishments on a respectable defensive posture, we may safely trust to temporary alliances for extraordinary emergencies.

          Harmony, liberal intercourse with all nations, are recommended by policy, humanity, and interest. But even our commercial policy should hold an equal and impartial hand; neither seeking nor granting exclusive favors or preferences…”

        • wkevinw says:

          Aussie Mark- it was Eisenhower and Washington…

        • Auldyin says:

          Just watched my favourite journalist Murad Gadniev (RT hatchet man) reporting live with flack jacket, no helmet as usual, from amongst the Taliban footsoldiers celebrating the ‘liberation’ of their country. (deliberately picked on the same day as 9/11 anniversary).
          He gobsmacked me (again) by reporting that US had spent more than the whole of the post war Marshall plan which totally rebuilt western Europe.
          He says there is nothing there, no power stations , no waterworks, no infrastructure, nothing, other than abandoned military bases.
          I don’t suppose any jail-time will be on the cards, makes Catch 22 look like non-fiction to me. Unless Murad is fiction of course, fake news.

        • Anthony says:

          I’ve been saying on here for months and months, when everything else fails, they take you to war…. It seems others have the same view….. Shame if you have boys around the late teens, they do like to send them off to war…..

    • Moosy says:

      the one silverlining of inflation is that we likely will not see that much house market crash and stock market crash in nominal currency value.

      if house prices go up 15%, with inflation it is still 5% down.

      Just wonder when they will start talking that the $15 minimum wage is not enough.

      • COWG says:


        $15 an hour is an appeasement… not a true discovery wage…

        It only became a social meme recently and does not have a basis in fact for substance…

        Most people above that level are paid for responsibility or competition for the task…

        There is no silver lining for inflation because a) you really don’t know what it actually is and can adjust for it and b) you are always behind it…

        For example, try asking for a 30% raise based on inflation for the next 6 years and try to justify it… you really can’t, even though you know it’s going to be there…

        • Nathan Dumbrowski says:

          Can’t you explain to the boss that the raise is just transitory?

          Maybe they will grant the wish next year. This year the reason for no raises will be all this damn inflation eating up operational costs. Maybe next year Joe

          Wonk Wonk Wonk plays via trumpet

      • RH says:

        You may want to search for shadowstats “alternate inflation chart” which has inflation as measured in the 1980s running for years at slightly just below 10%, so all of our wages, savings, social security payments, pension payments, and cash have been slowly stolen by the banksters’ “Federal” Reserve as it lends its banksters TRILLIONS at 2.5% a year or less, to lend to you and me on our credit cards at 25% a year or more. Thus, I very much doubt that even a $20 per hour wage would be enough to keep average US wages at the purchasing power level that they were ten or fifteen years ago.

        Technological advances and mass production have made TVs, computers, food, etc., grow so cheap that our buying power is deceptively increased or at least kept the same. If the “Fed” thieving had never occurred, we could probably all buy ten TVs or computers with one day’s wages by now, because TRILLIONS in earnings have been stolen by the banksters and their cronies. Read “What You Need to Know About Goldman Sachs Fraud,” for example, in fraud.laws.

        Goldman Sachs Fraud Resolution:
        On July 15, 2010 Goldman Sachs agreed to pay $550 million–$300 million went to the United States government and $250 million went to the investors who lost monies—in a settlement with the SEC. Additionally, the company regarded to change its mortgage investment business practice, including the way it created and designed marketing materials.
        END OF QUOTE

        Like the persons defrauded by B. Madoff, those defrauded by that company would probably now be billionaires if they had instead invested in AMD or Amazon or other stocks. Thus, the fraudsters of the banksters have netted huge profits that have effectively been cut out of all Americans’ net worth, because the punishment that they have suffered from the politicians and “prosecutors” that they have later hired or pre-hired has usually been a slap on the wrist for MASSIVE FRAUDS FOR YEARS. Read “Eric Holder, Wall Street Double Agent, Comes in From the Cold” in Rollling Stone.

        Moreover, keep in mind that many of the inputs into US products are currently coming from China, which has increased production costs, e.g., because of the fight that it picked trying to shut up Australian politicians calls for an independent investigation of the pandemic. Thus, inflation will keep on rising for years and a $15 an hour wage is NOT a living wage already in huge portions of or most of the USA, e.g., like NY or Southern California in which average rents for a modest house are about that most people get paid a month net of taxes.

        It is the banksters’ thieving, so that one bankster leader, for example became a billionaire after his bank (which was “converted” into a bank so that their “Fed” could bail it out), that causes so many Americans to want to recoup the stolen funds by raising the tax rates of the ultra rich banksters and their billionaire cronies.

      • Old School says:

        Stocks have their highest valuations in sweet spot of 1% – 3% inflation. Never been high valuations at high inflation.

      • 911Truther says:

        And the CPI says that 1/3 of the lie is rents… not actual rents, but “owners’s equivalent rents”… which are up 2.3% year over year as of July, according to the BLS.

    • Old School says:

      The markets are giving mixed signals.

      The smart market, the treasury market is saying there isn’t going to be sustained inflation.

      I just bought gold mining shares first time in my lifetime. They are priced for gold price to be lower, not higher.

      Stock market the dumb, manic market is not priced for inflation either.

      • John M Winterhalter says:

        It will be interesting to see of consumers have the money to pay for all these price increases… if not the we will have disinflation

      • Bricks says:

        I think the smart market has been overwhelmed by the fed and central banks. The big institutions, pensions, insurance companies etc, use allocation models and about the only thing they can do is try to hedge their positions in fixed income, and go up and down the yield curve slightly.

        Throw on top of that the impact of indexed funds, both fixed income and equities, which is the dumbest money, we get no real price signals of what the market is thinking until there is absolute panic and the Algos go wild dumping assets.

        • Old School says:

          Hedge funds can now scrape the internet to determine sentiment in real time. They are sitting closest to the theater door hoping to beat retail investor out.

      • Wolf Richter says:

        The Treasury market hasn’t been “smart” in years. It has been cowed by trillions of QE. The bond market was totally blind to this bout of inflation, didn’t see it coming, still hasn’t seen it. All it’s doing is what the Fed is doing, buy, buy, buy.

        • Joe Saba says:

          until market decides to raise interest rates despite fed
          THAT”S WHEN SHTF
          until then it is up up and away for 1%

          other 99% soon to become paupers

        • TweedleDum says:


          Treasury market gives a long term expectation of inflation. You wrote an article comparing it to conteporaneous inflation and growth, and showed that Treasuries always lagged. Even if one compares it to 10 year forward realized nominal growth, 10 year treasury yield .. the correct comparison in my view.. it would still appear a poor predictor.

          Where is the smartness then?

          Treasury market expectations are long term trend expectations derived largely by extrapolating historical trend (more of the same) and ignoring intermediate fluctuations in growth/inflation (“that is the so called smart part”).

          To be smart in the sense of the comparison you present in your previous article, Treasury market participants would need a crystal ball to see next 10 years, or the prevailing long term growth trend needs to be precisely followed in the subsequent 10 years.

          To be revising 10 year inflation expectation based on this year’s inflation, Treasury market would need to consider all the intermediate noise like non-smart equities. And for all we know, bonds may still be trying to do it. It could well be that inflation rages at 10 percent for 2 years (this year and next), followed by a crash and deflation leading to a 10 year realization of around 1.5-2 percent nominal growth, not too far from current 10 year yield. It is impossible to know ex-ante. Ex-post one needs a comparison, is there a better forecaster of next 10 years avaiable which outperforms bonds, in which case it should be a goldmine predicting trends in interest rates over long term, something notoriously hard to achieve.

          At least yield curve inversions predicting recessions gives some cdredibility to near term forecasting avility of bond market participants

        • Rcohn says:

          Investors hate higher taxes and complain when taxes are even under consideration to be raised.
          Yet they are voluntary buyers of 7 and 10 year bonds , where inflation is an obvious tax and guarantees a negative real return. And every rational participant realizes that the inflation numbers promulgated by the FEDS is not realistic and only guarantees inflation numbers that are to be put it simply ,LIES
          And because of this silly bidding up of bond prices , equity and real estate prices have been bid up to stratospheric levels.

    • historicus says:

      The Fed serves whom, exactly?

      “and to promote stable prices…”

      Punishing savers and earners….with the lame excuse of keeping rates low to “promote maximum employment…..” while there are RECORD JOB OPENINGS.
      So, the Fed pretends to help those who choose to be idle, yet they punish the working and earning and saving families of the country.
      Its kinda like making everyone get an injection, except illegal aliens.

      Pull back the money supply Jerome…the MMT thing isnt working

      • DR DOOM says:

        You already know who the The Fed serves . The MIC/ Security Complex which by extension was Congress’s bitch. The Security Complex has turned the tables on Congress. Congress is now their bitch. The SS has a “perishable dossier” on every Congress person that J. Edgar could only fantasize about while in his sexiest fish net evening wear. As the brilliant and honorable Senator Schumer from NY stated. ” The security services has six ways come Sunday to get you”. One well placed strategic leak to the Security State MSM outlet and careers and elections are terminated . Their Beast is now lording over them. The Beast does allow them to grab all the cash they can for their obedience . And grab they do.

  2. 2banana says:

    Until they can’t.

    Then comes the game of chicken of who blinks first.

    With corporations stuck with massive inventory costs, especially dangerous with items that go obsolete fairly quickly (electronics, seasonal, toys, clothing, etc.)

    And let’s face it, except for some small exceptions, consumers really don’t need anything.

    Hamburger Helper came out in the inflation racked 1970s….to stretch cheap ground beef.

    “And there is a good chance in this inflationary mindset that industries further up the production pipeline will be able to pass these price increases down the line all the way to the consumer, and that the consumer will pay them.:

    • Cas127 says:

      “Hamburger Helper came out in the inflation racked 1970s”

      But “Housing Helper” (more units permitted, with greater density) might be a lot slower in coming because first-there, vested interests control/abuse the permitting process, wrapping their self-interest (limiting supply spikes existing home prices) in the flag of “quality of life” hokum.

      • VintageVNvet says:

        Good point c10:
        Zoning changes already approved in Berkeley to allow 4 units on some lots in what has been single family residential zoned areas…
        Not sure if that will include the really high rent areas, but apparently movements that way are happening in many places.

        • El Katz says:

          VVNV: Friends I know who live in Huntington Beach are fighting the same issue (increased density)… so I would say it is infecting the high rent areas.

      • Bricks says:

        There is a lot they could do to ease the burden to allow more residential development, but homeowners, NIMBY – are the biggest barrier

        • Old School says:

          A home is people’s largest or second largest asset usually. You got to expect them to fight for protecting their investment.

      • JC123 says:

        High density housing has become all the rage in Boise, Idaho, and absolutely ruining the neighborhoods and quality of life here. Snapped up by Californians and others fleeing their “diverse, collective living” paradises and who actually don’t mind that homes are squeezed together and aligned so that your neighbors can see into your back yards, living rooms and bathrooms. Rows and rows of future slum cheap apartment buildings being constructed primarily for young families and service industry workers and overflowing as soon as they’re built, but with rents still climbing into the stratosphere. Literal war has been declared on farmland, large lots and anything smacking of rural lifestyle everywhere in this valley, under the rubric that “smart development” brings everyone a better way of life and can squeeze millions of people into a semi-arid land area reasonably capable of supporting a few hundred thousand with a comfortable base of local agriculture and breathing room for major concentrations of wildlife that depended upon this area for critical winter subsistence. But, hey, seems like nobody except the “old timers” minds the crowding, pollution, degredation of the local environment, rising crime, “diversity”, loss of traditional ways of life, rising housing costs and property taxes, increasing regulation of social activities and outdoor recreation, advancing drought and growing reliance on distant farming for food security because, you know, “economic growth” and all that.

        • Wolf Richter says:


          I understand what you’re saying. And parts of it I can agree with. But your condemnation of “diversity” puts you out on the thin end of a limb here. I understand too what this code word stands for. I’ve been happily married to a woman of color for 20+ years. Our household celebrates diversity. This is my living room your talking in. If you’re complaining because not everyone around you is white, well then, complain about it somewhere else, not in my living room.

        • Red says:

          “diversity” A soon as you said it like that all I could think of was my coworkers that talk of people that dont look like them.

        • Rcohn says:

          California has the most amazing combination of natural resources and climate of anywhere in the world . But it also has far, far too many people and cars and some of the stupidest laws and politicians in the country .

        • Wisdom Seeker says:

          JC123 put “diverse” in quotes. I take that as partial sarcasm. Somehow the elite coastal “diversity” types frequently fail to include the rural-state folks in their “inclusion” processes.

          Instead, the migrating coastal elites, “wealthy” with Cantillon-effect-inflated assets, are pricing the rural-state natives out of their own hometowns, while destroying much of the local culture.

          Consider the demeaning phrases applied to the rural productive workforce’s home territory: “flyover country”, “redneck states”, “cultural wasteland” (saw that here)… one could go on and on.

          One can argue against the faux “diversity” and still support genuine diversity.

        • Mistuhiro says:

          “I’ve been happily married to a woman of color for 20+ years. ”

          Is that what a Japanese woman is now called in the USA: “a woman of color”?

          I would think she would want to be called JAPANESE. At least most people here in Japan call themselves JAPANESE and not “PEOPLE/PERSON/MAN/WOMAN OF COLOR”

          Or have things gone so far down the tubes in the USA that this is the kind of bs that is now taken as common sense?

          No wonder the USA is is the mess it is with this woke bs permeating the entire country. What a stinking crock of cow manure the USA has become.

          If someone called me a “man of color'” I’d probably call them an idiot to be polite.

          I’m not, I’m Japanese.

        • Wolf Richter says:


          Yes and yes and yes. Yes, she doesn’t see herself as “woman of color” but as Japanese. Yes, that is the official term now used in the US media to group together all non-white woman in the US, including east Asians, such as women of Japanese, Chinese, and Korean descent. And yes, common sense has gone down the tubes.

          But note that in the US, “woman of color” is a description in the racial context (in this case, the comment I replied to lambasted “diversity” which means “racial diversity,” so it was a discussion in the racial context), not in the context of national origin. Those are two distinct concepts in the US.

        • VintageVNvet says:

          Just going to add in here my lack of regard for the term,,, as mentioned by others:
          Now, finally, after going to Redwood after a couple of years in holy wood looking for that heart of gold,, found exactly that with a person with far darker skin who actually has that heart of gold,,, and I am definitely accepting and enjoying ”being old.”
          IMHO, shame is all of those who cannot or will not STOP with all the various and sundry and extensive ”race baiting” started in the 1930s to put WE the PEONS in our place as subservient to the ”angels” of the pure and holy folks in Germany,,, until they met Jesse Owens,,, one of the really and truly GREAT AMERICANS of that era…

        • Craig says:

          Well, there are too many people and not enough houses. We have some economic means to balance this, one of which is relaxing zoning and incentivizing development of lower cost homes and penalizing overdevelopment of high cost… some potential dangerous pitfalls there, but there is reason in it. Prohibit housing purchases for purposes of investment only and penalize home ownership in excess of three or so.

          Of course, there is a more diabolical solution on the other end… we’ve essentially self selected our population based on critical thinking capacity with the vaccine… we could simply introduce covid to everyone, now, all at once, and shut down covid admissions to hospitals for a few months. But somehow I rather doubt this falls into your implied “diversity” criteria, quote unquote, moral turpitude aside.

          We all, all of us, have a common enemy, and it is those at the top playing us for fools. They’d rather you focus on such “diversity matters” as they fleece your pockets, screw your wife and steal your children’s future.

        • 91B20 1stCav (AUS) says:

          JC/Wolf-i actually hear what you’re both saying, and Craig has hit the core problem. JC-you’re upset about people leaving a BIG (population, particularly) state that once (and in many areas still is) as lovely as Idaho (i lived in Newman Lake on the WA/ID border for most of the ’90’s). What you (hopefully) don’t seem to realize is that ANY ‘nice place’ that doesn’t foresee and effectively manage its growth will have BIG problems when the inevitable immigration occurs, especially when a lot of that growth is generated by people and developers who find a relative lack of responsible ‘growth’ management in a region (and ID could be a poster child for this, certainly CA has been the same in the past and the necessity of playing catch-up is not the best strategy), irresistible. Having said that, i have also witnessed the ugliness Wolf alludes to in the Panhandle during my time in the neighborhood (sadly, it’s in every state). As humans, we are at once magnificent and miserable.

          As Saltcreep has so elegantly stated here, the seemingly permanent disconnect the U.S. (nay, the word) maintains between human economic/population and planetary resource equities are generating crises in more and more ‘nice’ areas (from emigration from previously ‘nice’ or not-so-nice ones-not forgetting ‘nice’ is always relative) unless your personal metaphysics soothe your temper about it, one might carry a few concerns about a concurrent lack of growth in planetary resources necessary for long-term human existence.

          Time to clean, lube and reacquaint yourself with those adaptation tools located in your DNA.

          may we all find a better day.

    • MCH says:

      Remember, it’s all because of those greedy corporation and nothing to do with the Fed or the trillions the government been sending to China via stimulus into the supply chain. Heck, look at groceries, half of recent increases in food prices stem from beef, pork and poultry… it’s all about those greedy for profit food companies. Sustenance is a human right, just like medical car, air, water, iPhones, flatscreen TV, Peletons, etc, all human rights, fundamental and inalienable.

      And don’t worry, by the time this decade is done, Hamburger Helpers will be a luxury items, I think we all know that it is scientifically proven that earthworms are fantastic superfoods, good for your bodies, and heck, can even be made to look like hamburger patties, already proven with impossible burger, and beyond meat.

      Get ready for the awesomest future ever.

      • Thomas Roberts says:

        There has been real progress in making vegetable based fake meats, that do taste real and have the necessary vitamins added into them. That are healthy.

        I’m not talking about burger king garbage. Or those terrible goo substitutes.

        Good fake Chicken has made the most progress and may be available soon locally.

        • Thomas Roberts says:

          In the event of total Armageddon. While hard to find, politicians are a safe and healthy food supply.

        • MCH says:

          actually, I’ve had soy based version of faux meat as far back as a decade ago, they tasted pretty good, the problem is that you couldn’t have industrial scale.

        • CreditGB says:

          Ground Beef: Ingredients – Ground beef.

          Whole Foods Market Plant-Based Burgers:
          Ingredients: Water, Soy Protein Concentrate, Expeller Pressed Canola Oil, Onions, Textured Soy Protein Concentrate, Soy Protein Isolate, Natural Flavors (Contains Wheat), Cellulose Gum, Onion Powder, Mushroom Seasoning (Mushroom Powder, Salt, Dehydrated Onion, Torula Yeast, Sugar, Spices), Yeast Extract (Yeast Extract, Salt), Caramel Color, Sea Salt, Tamari Soy Sauce (Water, Soybeans, Salt, Alcohol), Carrageenan, Garlic Powder, Organic Cane Sugar, Ground Black Pepper, Ground Mustard Seed.

        • Thomas Roberts says:

          Current meat substitutes are goo based, but future ones don’t have to be.

          You are also implying that most meat in America is pure. For numerous “meats” sold at stores and restaurants, only 30% of it is actual meat; the rest is a disgusting concoction of ingredients that make saw dust look appetizing. Additionally, the meat itself (before filler) in America, has had things done to it, that comprises both safety and taste (hormones, antibiotics, forced corn feeding, and much much more). There are numerous nightmare ingredients to most “meat” in America.

          Compared to that, a vegetable based substitute, if they can make it taste right, holds alot of appeal. If they can make it right, would probably be cheaper, healthier, thicker on average, more sustainable, and many other things.

          We’ll just have to wait and see.

        • Thomas Roberts says:


          Alot of new trial and error attempts in pipeline, will just have to wait and see, if any are good enough. That can also be made at scale.

        • Masked Ghost says:

          Back in the 1970’s grocery stores sold soyburger. It was a mix of about 50/50 ground beef and ground up soybeans.

          It wasn’t bad. It made a decent, high fiber hamburger.

          But as soon as the price went back down, the stores discontinued it.

      • Wisdom Seeker says:

        I wonder how much of the food price issue is related to food-produce supply chains that do run through China, even if the raw materials are sourced elsewhere.

        Food products should have every country of origin, trans-shipment and processing marked on the labeling. We’ll be astonished.

        • VintageVNvet says:

          Good point WS,,, and just have to add:
          Went to my usual grocery market yesterday,,, and
          PAID EXACTLY THE SAME for:
          Eggs, yoghurt, cheese, lime juice (for the margaritas), orange juice, and coffee as for the last two years since I ”retired” and had not much else to do, and not the same net net net income…
          Not sure where the ”meme” of higher prices for food is coming from, but definitely not seeing it in the foods we buy on a regular basis…
          Certainly that basis is based on the very best foods we can find at any store,,, because, mainly, as a partially farm raised person, I KNOW what ”real” food tastes like, and totally reject all the various and sundry and extensive efforts to make foods taste like paste or cardboard.
          Rather starve than put up with the ”stuff” parading as food with no taste, and absolutely none of the texture or other components of real food stuffs, from the beef to the garlics,,,

        • Wolf Richter says:


          We just noticed that the carton of OJ at Trader Joe’s shrank from 64 oz to 52 oz — but the price remained exactly the same. So now we’re paying over 20% more per oz than last time we went there. Shrinkflation.

          It was pretty slick, the way they did that. Safeway chose to keep the same height but make cartons narrower (started years ago) which was easier to notice. But it went in smaller increments over the years. Trader Joe’s kept the same width of the carton but reduced the height. So the cartons are now stubby.

          So check your OJ container for quantity and see if the quantity changed.

        • Wisdom Seeker says:

          The Trader Joe’s OJ shrinkflation happened a while ago, pre-COVID.

          Simply Orange, Tropicana and then Florida’s Natural downsized from 59 to 52 oz in 2018. Trader Joe’s held out at 64 ounces until 2019 and then went to 52.

          Mouseprint dot org appears to be a good source of info on shrinkflation and other consumer-misleading product shenanigans.

        • Wolf Richter says:

          Oops. Just looked at our receipts. Correct. My wife goes to TJ and Nijia. I go to Safeway and Costco. So I missed the OJ shrinkflation at TJ when it happened.

    • Old School says:

      A lot of consumers don’t need anything, but if you raise a family they need a whole lot.

      Plus government is constantly trying to stoke demand by making something a right. People always spend other people’s money freely.

      My parents always taught me growing up that if you don’t work for it, you don’t take care of it.

      • CJH says:

        We need a national full employment policy. Anyone who cannot get a job gets hired by government. A lot better than simply giving out the ‘dole.’

    • historicus says:

      and the Fed conveniently watches the PCE index which is chain weighted and allows for items that rise “too much” in price to be substituted out…
      talk about a biased index!
      So like the line in the movie “Vacation”….”hamburger helper is pretty good all by itself”

  3. Keepcalmeverythingisfine says:

    Stagflation is a hard one to get through. Can’t hide in bonds, stocks tank, cash gets eaten up sitting in bank accounts, even real estate takes a hit. Three and a half more years folks. Good luck.

    • Old school says:

      Once you have ran up the credit card the fun comes to an end and you have to slog through life with the debt hangover.

      As much as they say debt doesn’t matter and it’s different for the government, that’s not true. They are just able to play games with fiat to be dishonest with the cost of the debt. Savers and most wage earners have been paying price for more than a decade. Consumers are paying price now and probably stock holders will follow shortly. Too much consumption and not enough production in USA will have its flesh to extract.

      • historicus says:

        So they say “debt” is an asset…and “debt” creates money…
        how come the credit card companies dont see it that way?

        • Joe Saba says:

          cause their vig is 20%+
          and they get 3% transaction fees

          and visa/MC don’t have any problems with debt
          it’s the banksters issuing said cc

        • Wisdom Seeker says:

          The credit card companies DO see it that way. Whenever you owe anyone, your debt IS their asset. Your promise to pay is now their future income.

          But unless they own the printing press, they had to forego something in order to save the money they lent to you. You’re paying them extra (as interest) for the privilege of having your cake now, whereas they chose to eat less for a while in order to have more in the future. At least, that was the classic “loanable funds” save-to-lend theory.

          Nowadays, it’s not so clear that it works like that, and credit cards charge interest rates to used to be illegal, to those who get caught short, while sharing those usurious revenues by offering rebates to those who pay every month. Everyone with a rebate card is quietly suctioning wealth from those who aren’t as responsible. A peculiar form of financial cannibalism…

  4. Red says:

    From what I’ve read after the midterm elections things may go to heck fairly quick how does this double digit inflation play into that?

    • Joe Saba says:

      publicans bad, dimwits worse
      take your poison

    • Djreef says:

      This won’t wait until midterms.


      • Joe Saba says:

        obviously didn’t have to go through carter years
        it’ll keep churning with Biden and nancy pouring on more fuel to fire
        then they’ll try to put out fire and take credit for it
        but I don’t think they can put this fire out

        difference between 70’s super inflation and today
        we are WEIMAR GERMANY now – ie LOADED TO GILS WITH DEBT we can’t pay

      • Swamp Creature says:

        Dr Havenstein in 1923 was asked why he did what he did in destroying the German currency by massive money printing. He said it was either that or have massive civil unrest and violence. He hoped the economy would grow out of it, and the debts would be repaid by devaluation. Are things any different today in the USA?

    • makruger says:

      As long as the nation doesn’t get handed over to another cabal of conspiracists, politically things ought worsen much further. Economically….well that’s a different story.

      We have an awful lot of systemic risk and moral hazard to unwind as the overstretched markets return to and probably significantly overshoot their historical nominal levels. In summary consider the next 10 years or so a lost decade. Like the roaring 20’s things will likely end the same way.

      • Old School says:

        I think it’s going to be different. As the economy gets worse politics get even more ugly.

        I think Harry Truman might have been the last politician that wanted buck to stop at his desk.

        • 91B20 1stCav (AUS) says:

          os-don’t think he wanted ‘the buck’, but had the maturity/manhood/ownage to know it HAD to stop with the administrator occupying that ‘great resolute desk’ for the sake of future America…(though his, and everyone’s mileage always has, and likely always will, vary…).

          may we all find a better day.

  5. Djreef says:

    Stagflation sucks.

    • Wolf Richter says:


      “Stagflation” means inflation plus declining GDP, meaning GDP growth with a minus-sign in front, or zero growth.

      But GDP is still growing (with a plus-sign in front) at a massive unsustainable rate, and it’s going to grow just a little more slowly. So far, there is no sign of declining GDP (with a minus-sign in front).

      Goldman Sachs lowered its GDP growth forecast for 2021 to 5.7% from 6.2%. Normally, we’re happy to get 2.0% GDP growth for the year. A 5.7% or even 5.0% or 4% or even 3% GDP growth would be HUGE for the US economy.

      The last time the US reached 3% GDP growth for a full year was in 2005.

      • 2banana says:

        The 70s misery index was the unemployment rate + inflation rate.

        • Nacho Bigly Libre says:

          Do you know how to improve unemployment rate?

          Mandate that employers fire half the employees due to OSHA violation*.

          * OSHA violation = not vaccinated

        • Wolf Richter says:

          Nacho Bigly Libre,

          It doesn’t work that way. In OSHA violations, the employer (not employee) gets fined because the employer violated the OSHA rules, which are supposed to provide a safe work environment for the employee. OSHA oversees employers not employees.

        • Nacho Bigly Libre says:

          Keep splitting hair.

        • Joe Saba says:

          actually wolf – john mauldin had great article this weekend on stagflation
          it’s HIGH INFLATION(ie devalation of fiat $dollar) with growing GDP
          but when you NET THINGS OUT – GDP Growth minus ‘inflation'(ie using more $$ to buy same amount) you get NEGATIVE growth
          of course it also means WAGES continue to FALL BEHIND massive $dollar devaluation(I refuse to call it inflation-fake govt word)

      • MCH says:

        give it time, Mr. Richter, we’ll get there, we must have patience. Rome wasn’t sacked in a day, we need to keep working at it to get to that point.

      • Cas127 says:

        Nominal GDP (unadjusted for inflation) is one thing, real GDP (net of inflation) is quite another.

        That is one major reason why the G expends so much energy trying to convince the public that a lot of inflation really ain’t inflation (this ain’t your Pa’s F150, and his college didn’t have rock climbing walls…)

        But, in the end, nobody’s life is really improving just because the G prints enough lucre to add a zero to prices…in fact, quite the contrary.

        But the G loves ’em some nominal GDP, since they can goose it up merely by printing cash (which they want to do anyway, as a mechanism for control). So the G can claim that the economy is booming, even as savers get dispossessed.

        • Wolf Richter says:

          Just to clarify, the GDP numbers I quoted were real GDP, annual.

        • Joe Saba says:

          REAL gdp as in using DEVALUED $dollar to buy LESS
          seeing 30-50% price increases across the board

          plumber – 5 price increases so far this year with another coming
          paint, wire, steel, things used to build stuff we need
          love the used vehicle market going up 35%
          just means buying less with devalued fiat $dollar

      • RightNYer says:

        I’m just not impressed by a high GDP growth number. The government borrowed and printed money and handed it out to be spent. How could you not have growth under those conditions?

        • Nathan Dumbrowski says:

          A: Japan? The sparked the saver generations.

          Agree with your thought about printing and thin air creation of trillions of dollars on a scale that is like a moon shot but for an economy. They (world gov’t) really have goosed the entire system by raising the bar to a level never seen before

        • Mark says:

          Exactly I don’t have the faith that Wolf does in the numbers we are handed by our caring government.

          Like the 1%-2% inflation we were expected to believe.
          And the 4% unemployment we are still expected to believe.

          This is the type of stuff that made Soviet Pravda famous ……

        • marquis says:

          And as the GDP is deflated, a fake inflation rate (real inflation is much higher than stated) creates a massively fake GDP.
          The real GDP is much lower than stated.
          And the clown in power…

      • Jim V says:

        5.7% seems like a roaring number until you consider that we contracted 3% last year. When you subtract 2020 from 2021 you get 2.7, or 1.35 average over the two years, which is slower than the average growth rate over the last decade. We spent all this money just to achieve that.

        • Joe Saba says:

          if YOU DON’T MASSIVELY devalue $dollar then how are you going to pay these HIGH PRICED PENSIONS
          got to make paupers out of 90% retirees 1st

      • Yort says:

        Wolf – without going into detail, the govt has added so much fluff to GDP via the “financialization of the economy”, “social media GDP”, “patent GDP”, and the huge sums of free printed money that somehow count as GDP due to monetary magic (even the broken window fallacy counts as “Hurricane GDP”, “Wildfire GDP”, etc)… So even a 1% GDP print is almost like negative GDP from 20-30 years ago when the economy followed “Mark to Market” versus “Mark to Fantasy”. Has capitalism not mutated over the past 30 years from a means to an end to an end to mean(ing)??? We most likely already dove head first into stagflation at this point, but who knows how deep we go until we hit bottom as the Fed has created a global dark pool of insane excess that blinds us all to the current and future financial and resource based “base realities”.

        Honestly do you trust the current GDP calculations?
        Perhaps humans would be better served with GNH (Gross National Happiness) or some other experimental form of “Group Societal Success” (GSS?) that does not tend to enrich the top1% at the expense of the bottom 99%ers.

        “GDP” is kind of a joke as a measure of national wellbeing. Is GDP, in basic concept, not just “Number of Workers” times “Productivity”, which means one could substitute “Number of Robots” times “Robot efficiency”, and perhaps then achieve 100% GDP per year (SP 500 @ 1,000,000,000,000!), yet doe that ensure that the bottom 99% of carbon based humans are actually better off, when the top 1% own all the robots???


      • historicus says:

        And how much of GDP is government spending…spending of money that is deficit spending from sources like QE?
        21 Trillion in new national debt in just 12 years…..and ready to click up big…

      • Confused says:


        It’s been decades since I studied economics in college, but I don’t recall “stagflation” being a real term in economic theory at that time. It was a term coined in the press. In any event, your definition seems to describe depression combined with inflation rather than what I remember from those years — economic growth that is slower than the population growth combined with inflation. That situation put the federal government between a rock and a hard place. If the government tried to increase the growth of GDP, it simultaneously increased inflation. If the government tried to reduce inflation, it simultaneously reduced the growth of GDP. We know which option Paul Volcker chose.

        • Auldyin says:

          There is no rocket science here.
          Gdp =V*P where V is total physical volume of goods produced ie cars + haircuts + roofs +++. Often referred to as the ‘supply side’
          You can’t add these together unless you use the money value of each good which is averaged out as P.
          When P goes up it’s inflation, when P goes down it’s deflation. In that equation it is perfectly possible for V to go down (less goods) and P to go up (inflation) together, hence the term stagflation.
          What would be great for consumers would be the very opposite, ie falling P and rising V but who in Govt cares about consumers when you have Facebook HQ in your constituency?
          While I’m on this I should say V=E*p where E is employment and small p is productivity ie output per head which is the most important number for national prosperity but nobody in the west seems to care about it anymore.

        • 911Truther says:

          I moved to Puerto Rico in April. Back in April, it was impossible to visit Sam’s or Walmart and not see someone wheeling a new big screen TV out of the store. Remember, that was around the time of the shimmy checks.

          This week, we went to Sam’s and the store traffic was down 80% from what we’ve seen all summer. Remember, this is when the Federal Unemployment benefits expired.

          GDP growth in 2021 is the Fed and government handout programs, along with millions of renters having all that extra cash burning a hole in their pockets. The economy is in free fall, in my opinion.

      • Rudolf Zimmer says:

        Let’s hope the wage pressure continues and wages continue increasing.

        There is no stagflation now. Inflation started when money was injected into the customer base. This ends now and consumption will end as soon as this money is spent. Without wage increases, we will see stagflation since price pressure will continue.

        Stagflation is worse than inflation or deflation. I saw it when I was a child and it hunted me all my life.

      • roddy6667 says:

        When a stockbroker or fund charges a commission for selling shares of bubble stock, that is counted toward GDP. All they have really done is move money from one pocket to another. How much of the current GDP is pumped up by the financialization of everything?

      • Robert Hughes says:

        Consider than up to 2010 fed debt to GDP ran about 65%, by 2019 it was at 100% and now 155%.

        Simply on a vector that it takes more and mor debt to produce a dollar of GDP, headed to the stars.

        Now also factor in all the negative demographic factors that are headwinds. Future doesn’t look very promising.

        • Jon says:

          Negative demographics can be nullified by massive immigration which is what government is doing and it helps also wage suppression

      • Roger Pedactor says:

        GDP growth year over year or since ’19?

        Anything will seem massive compared to last year. But the core issue is that GDP is including financial companies and existing home sales, neither of which are really growth. They are just money being shifted around.

        GDP is a manipulated metric, just as badly as CPI. Real GDP should only be pegged to actual goods and services. Inputting monetary values into a quant is not work.

        Selling an existing home reflects no real work or goods. Why are these and maybe even used car sales considered part of GDP? It’s just all a scam to distract from the joke of “service economies.”

      • Ray says:

        The disease based years make the GDP increase semi coming out of those years meaningless in comparison.

  6. Rowen says:

    All the auto mfgs shut down production again because of chips. End of year sales should be interesting…

  7. Eastern Bunny says:

    Next stage in this predictable process : start blaming greedy corporations and businessmen for increasing prices.
    We never learn and deserve whats coming.

  8. David Hall says:

    U.S. PPI rose 8.3% in August.
    China PPI rose 9.5% in August.

    In Malaysia they closed a chip assembly plant after three people died of COVID.

    We need chips for vehicle assembly and repair.

  9. qt says:

    Hulu will increase prices by $1. Food prices up. Gas prices up. Uber/Lyft prices up. Rent up. Car price up, etc.

    Is there anything that is going down in prices? This is a serious question. For example, are TV prices going down like most tech? Phone? I have this theory that in the past, services or goods that are essential and can’t be outsource are going up in prices but is offset by prices of goods that we don’t need and that can be outsourced (i.e., see TV prices, toys). This offsetting of prices made inflation look tame. However, this is not the case right now due to supply chain problems caused by the massive money printing.

    • Nathan Dumbrowski says:

      Honest answers. Phone call charges. News. Stock trades. Shipping charges.

      That was all I could muster

    • Dave Kunkel says:

      According to my Vietnamese wife who lived through serious inflation in her country, prices are not going up, money is getting cheaper.

  10. DR DOOM says:

    Only when the average joe is on his knees by prices so high he can not eat will the poor dumb shit figure out that it is Congress and its bitch the Fed that has de-based his currency and his life. Joe needs to be hit in the head multiple times with a shovel untill he finally figures out who has been at the other end.Suffering ain’t even started yet. These are realitive boom times. Joe ain’t learned Jack yet.

    • historicus says:

      Joe will likely suggest “inflation compensation checks” be issued…

    • Dpy says:

      You might have it somewhat backwards. The private Fed works for the financial elite. As does congress. Anyone who bucks the system doesn’t make it into office. All this social spending is part of Bread and Circus as the Fed grows its holdings.

      • roddy6667 says:

        The Republican Party works for the top 1%.
        The Democratic Party works for the top 10%.
        That lever in the voting booth serves the same function as the steering wheel on a child’s car carrier seat.

        • Jeff says:

          As somebody in that top 10%, I fail to see how the Dems work for me.

          IMO they altogether are the Uniparty and do the bidding of those who fund them, i.e., the 1%.

  11. georgist says:

    Really this is the perfect sponsor image.

  12. Boomer says:

    I’ll dig out my WIN button!


    Whip Inflation Now (WIN) was a 1974 attempt to spur a grassroots movement to combat inflation in the US, by encouraging personal savings and disciplined spending habits in combination with public measures, urged by U.S. President Gerald Ford. The campaign was later described as “one of the biggest government public relations blunders ever”

    • Jeffrey G Moebus says:

      Heh. Yeah; the alternative was LOSE: “Let’s Organize a Sane Economy,” which never got tried. Even yet.

    • Eric Pepper says:

      I bought a handful of these buttons for an amazingly low price of 11 dollars! An instant hit at parties composed of financially literate….other than those people are clueless to the insanity of these financial Times. “If you are not outraged by the actions of the financial authorities, you must be financially illiterate” .

    • historicus says:

      “…..by encouraging personal savings and disciplined spending habits in combination with public measures,….”
      Boy oh boy, are those suggestions gone forever.
      Saving? And lose 5% a year…..

      Question….if money is an asset, and I use (spend) that money at a loss, can I write off the inflation loss?

  13. A says:

    And with our crony “conservative” governments the FED will shower the rich with more and more money to make up for the inflation. But you, the middle class? You get nothing except being told to pull yourself up by your bootstraps, get a 2nd job, and hustle more.

    • 2banana says:


      A single party controls the house, senate and White House.

      And they are about as far away from “conservative” as you can get.

      FYI. A conservative is traditionally defined as someone who wants the Federal Government to live within its tax means and to follow the US Constitution as written.

      • Michael Gorback says:

        They might be defined that way but they don’t implement it. They spend at least as much as the opposition when given control.

        • MCH says:

          yep…. those guys are called CINO… I’m sure you know what that means. I think the last conservative they had was Ron Paul… and he was more libertarian. (not sure why he is that… doesn’t look like he ventured into the library much…. :P)

        • Michael Gorback says:

          Also called RINO.

          I used to consider Ron Paul a nut case decades ago. Always whining about the Fed and fiat money.

          He was a visionary and definitely libertarian.


          A constitutionalist.

          Vocal critic of the federal government’s fiscal policies and the Fed.

          Believes in sound money and a balanced budget.

          Opposes the military–industrial complex, the war on drugs, and the war on terror.

          Opposes mass surveillance (PATRIOT Act and the NSA).

          Opposes interventionalism.

          Libertarian or conservative? Elements of both. Ran for president 3 times but with that belief system he was never going to get elected president.

        • MCH says:

          You know, I think when a guy like that comes along, the establishment just wants to crush him. I agree with you that a decade ago, I looked at him the same way. But turns out I was the nutjob in the insane asylum, and he was the rational one. His son will get there some day.

          The crazy thing is that it took the current and the previous administration to actually get a handle on how nutty we are as a country and as a system. The returned to grown ups in the room was anything but…

          It’s times like this when one starts lending credence to the ideas around cryptocurrency. Something relative stable and finite with value that doesn’t erode steadily due to nutty government control.

        • Wisdom Seeker says:

          Sadly, the destruction of the gold standard and the ensuing rise of print-and-spend politics has led to an infestation of both RINOs and DINO’s in DC.

          In the 1980s the Republicans complained about “tax-and-spend” Democrats.

          Now they don’t even complain much about “print-and-spend”, as long as they get their cut.

          If the Democrats actually solved any of the problems they claimed our money was solving, they might have a better case, but too often it’s just waste, as Wolf has repeatedly shown.

          When you print-and-spend and then waste the funds, stagflation is inevitable because too little of the printed money is going to productive use.

      • 91B20 1stCav (AUS) says:

        2b-with ‘deficits don’t matter’ and tax cuts during a virtual wartime, your point applies to the putative ‘conservative’ party as well…

        Intellectual rigor deficits being run concurrently.

        may we all find a better day.

      • economicminor says:

        I really don’t think we’ve seen one of those in our life time. There is always a reason to over spend. War on Poverty, war on drugs, war on terror.. always an excuse to give tax breaks to those who don’t need them and up the spending.

      • CJH says:

        Boy if that is ‘control’ I really don’t want to see ‘out of control.’ Biden is making a good faith effort to keep us from descending into Depression. The monetary control system is collapsing. The fiscal tools are being dusted off and hauled out. Still, Presidents have a really hard time of figuring out how to stop feeding the oligarchs at every one else’s expense. Raise taxes on the oligarchs. Raise wages and eliminate FICA. Hire everyone who cannot find a job. Put them to work improving public assets. Beats the dole.

      • Carl Wilson says:

        “A single party controls the house, senate and White House”

        Republicans + Conservative Democrats
        Liberal Democrats

        The permanent majority.

        • Wisdom Seeker says:

          “There is only one party, the Property Party, and it has two heads, Republican and Democrat” – Gore Vidal, 1970s. Still true.

          The only thing that can defeat the Property Party is a populist uprising, but the Property Party owns the printing presses and the populists are ever-divided by social wedge issues.

  14. Marco says:

    Let’s face it… like a weak reed the Fed bends where the political wind blows, economics or fiscal justice are secondary issues for them.
    They wanted to pump up the liquidity for the Democrat Administration but they have let the situation slip away from themselves. They are now going to have to start hitting the brakes harder because of that bias (unlikely) or they are going to barely taper (which I believe is likely) which means more Inflation Tax, especially for the poor.

    • historicus says:

      The Fed was nearly as bad under Trump.
      Remember, Trump invited NEGATIVE interest rates.
      And like a psychiatric patient, we can see that Trump hates interest rates (always a leverager) and hates the Fed (put him out of business in 1981),

      To his credit, Powell actually got rates back to “normal” in 2018 when Fed Funds rose to meet the then 2% inflation. The markets didnt like it, and Trump jawboned him into a new course.
      Someone threw their arm around Powell and said “this is how its going to be”, and he hasnt been the same since.

    • Dpy says:

      I think the Fed mostly wants to grow its assets these days, done by buying mortgages and treasuries with conjured fiat.

    • CJH says:

      The poor don’t have any money to ‘inflate’ away.

      • Wolf Richter says:

        They have wages that get inflated away though. Inflation is one reason why the poor remain poor.

      • Wisdom Seeker says:

        The poor also owe most of the net debt, which potentially could be inflated away, but … in stagflation earnings don’t keep up with rising costs … so inflation will put them more in debt, not less.

        Arguably the bottom 90% have been in stagflation for about 20 years. Income stagnation is well documented. Living expenses not as well tracked by CPI, but clearly have been rising steadily as corporations extracted higher “profit margins” at the expense of both workers and consumers.

  15. LM says:

    Why isn’t this slowing the housing market? So many homes on the market are in need of repairs, addressing deferred maintenance, and renovations, and yet buyers are still not put off? I have been.

    • tom15 says:

      I’m now seeing builders from out of state. Like 07, the out of town contractors showed up @ peak frenzy.

      Expect the same to happen, but the new jobs keep piling up.
      Maybe they are all preppers. I’m rural, and in flyover. Home schooling,
      or coop has exploded. That and living off the land.
      Foxes & yotes are starting to have obesity issues with all the “free range” KFC running around.

      Oh well, no debt this time around like 08. Just me and the Mrs.
      Guns, ammo, fishing poles, and garden. Need to update the still.

    • Anthony A. says:

      Fear Of Missing Out (buyers). Still going on around here…..houses last one day on the market.

      • El Katz says:

        There’s a development out here that has simply shut down construction (Shea, Toll Brothers) other than infill lots. Even the pre-sales are shut down, with no firm delivery dates. They have put in infrastructure (water, sewer, underground utilities) and laid out roads – but not paved them. In talking to a manager at the on premises restaurant, he indicated that they will not start to build again until all the materials are purchased and stockpiled. The list of things they can’t get has grown and the wild price gyrations make it difficult to predict appropriate pricing structures.

        Still no shortage of people willing to plunk down $1M plus for a semi custom tract whack on a postage stamp lot.

        • Robert Hughes says:

          We have been looking at 55 communities in sc, ga, fl. Build out time for a new house from signing is being quoted as 1 year, with a built in expected inflation factor to be determined at competition. Meaning no fixed price, so just be ready to bend over. No thanks.

          Side note if pool is desired, what in 2017, 2018 cost 45 to 55k is now quoted at 75 to 100.

      • ru82 says:

        I have friends who have money, good jobs, and good credit and cannot find a house to buy. Sure…they can find a house in a low income neighborhood but they do not want to live there so they will continue to rent and hope that housing drops or more houses come onto the market.

        During HB1 there were so many spec houses being built with no buyers in sight or speculators were buying houses with intent to flip immediately, we had too much inventory. There was FOMO back then too. I had a friend who decided to get into the home builder market in the mid 2000s. I remember him building 3 or 4 homes but too late in the game and went bankrupt as he could not find any buyers in 2007 and 2008.

        • JayLah says:

          In Cleveland there is a construction boom as of late. In the suburbs I have seen hundreds of new homes under construction. recently. With the metro area population steadily declining I can not understand who the buyer for these houses will be. Most of them seem to be $300k-600k houses. Not to mention government housing construction has gone through the roof. Sherwin Williams is constructing a new headquarters to the tune of $600 million. There are also a lot of apartment buildings being built in the city. One example is the Intro Cleveland apartment complex, one of the largest wooden apartment building in the US.

          “Studios will start at $1,450, one-bedrooms will start at $1,750, and two-bedroom units will start at $2,600. Ten penthouse units could cost considerably more.”

          I make alright money but can not justify 1,750 for a one bedroom apartment in Cleveland. These prices seem ridiculous, especially since the area it is being built in is a B grade neighborhood. I think soon buyers will have sticker price shock and possibly hold off on purchasing. Everyone I know who hasn’t already purchased is planning to wait it out a year or two. I hope it works out for them but with interest rates so low they might just keep this charade going.

    • Paulo says:

      It’s the low interest rates that keeps it going. Article today stated the lack of listings where I live continues to push housing prices higher and higher. The good thing is we now have more people working than before the pandemic for the last 3 months in a row. This situation is adding to the higher house prices, plus vacationers planning to remain here.

      I wouldn’t buy now, either. Unfortunately, I gave that same advice 5 years ago to my friends daughter. Rentals are suffering the same price pressures despite lots of new construction and available units.

      • Lynn says:

        Lower interest rates (this low anyway) doesn’t really benefit actual home buyers, it benefits large scale investors who probably get much closer to 1.5% than the average *home* buyer can. Plus, with increased prices come increased taxes, plus the home repairs- even at sane prices for lumber. Most home buyers I think can not do their own major repairs or finished carpentry.

        If a home buyer can get a loan at 3.25% and an international corporation can get one at 1.5% then the loan cost doubles for the average home owner as well. Not to mention corporations probably pay less percentage on fees as well.

        • CJH says:

          “Plus, with increased prices come increased taxes, plus the home repairs- even at sane prices for lumber.” Newly assessed, higher prices, cause the property tax rate to adjust. In my city, the property tax rate is going from $24 per k, down to $17.5 per k. Governments are not in the business of making a profit.

      • historicus says:

        Real estate is the most ILLIQUID of markets.
        A click up in rates and you will see inventory galore and a buyer pull back.

    • Lynn says:

      Greater fools, scammy REITs, and foreign money laundering.

      • Red says:

        I have heard of money laundering pushing up Canada’s house prices. I have yet to figure out what type of crime they are getting the money from.

        • Lynn says:

          Reportedly a lot of it is bribe money etc from China. Plus a Nigerian Prince or 2 that has scammed his countries treasury. Plus any international organized crime- like credit card fraud, drugs, arms dealers etc.

          I don’t know about Canada. but it is much more difficult for US citizens to do this as money needs to be accounted for. Foreign money does not.

          They had a pilot program in Miami and NYC and a few other places where they demanded foreign money be accounted for- where they got it. Luxury condo sales suddenly went down I think 30% IIRC. I don’t rember the other stats.

        • Michael Gorback says:

          Probably people trying to move money out of China and the money might not be the proceeds from criminal activity. Oh wait. China. Yeah, criminal activity.

          They’re pretty clever. One scam takes place in the US because of all the litigation we have.

          They buy or start a company here. Something bad happens and the company gets sued. The plaintiff is in cahoots with the owner or a front for the owner, so they have a huge settlement and the money is now in the US under a different name.

        • Anon1970 says:

          1. Chinese factory owner invests the required amount in Canada to qualify for a Canadian immigrant visa.
          2. Wife and kids move to Canada and kids are enrolled in local schools and join provincial government health plan.
          3. Husband continues to run his business in China, visiting the family several times a year.
          4. Little or no income tax is paid in Canada.
          5. Little or no follow up by Canadian tax authorities questioning how the family can afford their $1million+ Canadian home.

          My guess is that the Chinese family is committing tax evasion and that Canadian tax authorities are looking the other way.

          Property tax rates are very low in Vancouver (about 0.3% of market value) and almost as low in Toronto (about 0.6% of market value).

        • Jon says:

          Most of the money are from corrupt means bribery tax evasion etc
          Most of the powerful people in developing or 3rd world countries have their ill gotten wealth in western countries

        • RH says:

          Probably CCP corruption from what I heard, and it is ALL corruption all the time in the CCP from what I have heard. That is why they are banning any way to ship money out of China like the digital coins, etc.

          To those who have now decided to follow the steps of certain financial “geniuses” and invest in “mainland Chinese companies,” e.g., of a well-known female financial advisor who could not see or find a financial bubble (or her own rear end) with a compass, map, GPS, GPS enabled tablet, and a sherpa guide.

          Before you do so, you may want to consider that what you can actually invest into are not those companies but their “variable interest entities” because the CCP does not want foreigners to actually own and thereby have rights to inspect the books of their CCP-Ponzi-schemes-companies.

          Thus, at best, your “investment” in mainland Chinese companies (reportedly even those listed in US exchanges) amounts to a right to receive some funds from Chinese companies in YUANs, which the CCP can laugh at or repay after they have utterly devalued their currency. Why would they do that, you ask?

          Well, that question shows that you have not done your homework. As reported in Real Vision Finance interviews and other sources, the CCP has had huge trouble keeping mainland Chinese capital in China. Imagine that you are Jack Ma or someone like him, you could decide to keep all of your money in China and you could also decide to put your most sensitive appendage into a nest of killer bees.

          However, wiser, mainland, Chinese persons will probably say to US or EU companies for each shipment of thousands of widgets, pay me $1 million under the table and pay me the rest in the normal way. After all, if you have ever ordered anything from China, you know that they already are happy to do fake invoices: e.g., claiming that the $1000 computer that you purchased on their website actually cost you $50, to evade U.S. import tariffs.

          Thus, mainland, Chinese capital available for the CCP to steal has been hard to reach. That is why the vice-dictator of China recently went full Krushchev and banged his boot (well actually, probably his $10,000, hand-made, pre-stressed, extra cushioned, Louis Vuiton, beatiful, shiny, Richeleu, lace ups with beautiful Blake stitching) on tables to demand that Chinese teachers PAY BACK their meager BONUSES, because the CCP is out of dough.

          They also told the local CCP thieving gangsters-CCP-officials that all profits from the sale of local land are to go henceforth to central gangster headquarters in Beijing. (What will those those sad, local, gangsters-CCP-officials do now for income for their yachts, prostitutes, etc.? I imagine that they will start some socially beneficial, new tactic like killing more people to sell more of their organs to foreigners or creating more fentanyl to ship to US mass-murdering-drug pushers-pharma-companies.)

          Similarly, the CCP just canceled their next aircraft carrier reportedly and their precious reserves of metals and oil (which they would need if they wanted to invade their neighbors, because the US, Indian, UK, and other navies could be expected to blockade shipping to China once they did that) are being sold. Think about that: there is nothing their fat, liposuctioned-nearly-to-death leader, who has been called Pee Pee de Pooh, wants more than to invade his neighbors and steal their stuff.

          What (other than financial desperation) could force Pee Pee de Pooh to sell his most precious, neighbor-stealing-tools, when he has long-cherished dreams of stealing many things from each and all of his neighbors, like their islands, assets, lives, organs, and funds? Well, the CCP’s Ponzi schemes may have just sprung leaks: Evergrande Real Estate group’s likely insolvency, with other Chinese companies similar insolvencies, like Fantasia Holdings’ financial fantasies.

          Even the bankster allies of Pee Pee de Pooh have now been reluctant to lend more to him, albeit they are happy to keep his ponzi schemes-companies listed on their stock indexes and to claim that things are going on swimmingly in mainland China. After all, the Wall Streeters and banksters need to get their cuts of the funds being stolen from gullible investors by Pee Pee de Pooh’s ponzi schemes-companies: if they did not have such frauds and their “Federal” bankster Reserve cartel, how else would they be able to steal Americans’ and Europeans’ wealth?

    • Jon says:

      Housing is like a titanic
      It takes lot of time to change direction

      • Texas23 says:

        Unless that direction is down. After splitting it only took 5 to 10 minutes for the Titanic hull to be resting on the sea floor.

  16. Jack says:


    So if Mr. Richer is Not the main contributor to our rabid inflation “ by the large orders for shoes and beer mugs 😉”?!

    Who is to blame for this runaway hikes exactly?

    Before you start your answers folks, let me tell you this little story about farmers warning to the government in Western Australia “ a large grains production hub “, the story goes like this,

    The government of Western Australian State has kept that corner of the country largely locked up from the rest of Australia for the past 18 months! They have like 5 Covid cases??!!!🤣🤣🤣

    Now the West Australian farmers are warning that they have to employ 80 years old and primary school kids!!! To operate their grain harvesters if nothing is done by the stupid government to open up theirs borders and allow the workforce to travel.

    You get it yet?

    They want us to starve and be done with quick smart! That’s one of the byproducts of grinding everything to s halt.

    Supply chains that the business established and operated “ by the guidance and legislations passed throughout the last 3-5 decades “ have been taken out by a virus!!!

    What will it take for us in the “ democratic “ countries to have a F$&$)ING revolution?

    Maybe an Argentine style “inflación”?

    4 TRILLION dollars of wasted and misplaced Funds wasn’t enough apparently! 🤣🤣🤣

    • Paul from NC says:

      >What will it take for us in the “ democratic “ countries to have a F$&$)ING revolution?

      It generally has taken 51-53% of the population at starvation levels for more than 2-3 days to start a proper revolt.

  17. Don says:

    We will be feasting on the fruits from the believed notion of “little need of accountability”. We can ignore knowing there is never free money all we want however the free money thinkers one day will be forced to gaze into a mirror and admit they were never the fairest in the land, and now it’s time to pay. Don

  18. Michael Gorback says:

    Interesting about nonresidential estate services. I wonder what’s driving it? Builders looking for new sites? People looking for a bug-out place? I get spam for new developments in the Texas Hill Country but they’re mostly large ranches being chopped up into 10 acre parcels.

    I recently bought 20 acres in the middle of almost nowhere. While I was searching I came across a listing that was predominantly wooded but already had a cabin on it. It was a really nice setting but way above my price point.

    However, when adjusted for the cost of clearing a home site, running in water and electricity, a septic system, and building a house [with unavailable materials], it looked like a bargain. And one of the few properties where if there was a house it wasn’t a double-wide.

    It was listed a week ago. I saw it Sunday and started to prepare my haggle strategy. Monday morning my real estate agent told me they had 5 showings scheduled just for that day.

    Strategy changed dramatically. I immediately put in a bid for full asking price, cash. I was gambling that some people might try to haggle the price 10% or would offer full ask but had to finance. My bid would be the most attractive unless someone bid over the ask. Two other parties entered bids right away.

    If I were the seller I would have pulled the listing and then re-listed it much higher. I think somehow the seller was under some sort of time pressure though.

    Two days later they accepted my offer. Did I get caught up in the inflation in raw land? Probably, but I’d like to think I was near the front of the line. A property has to be price-inflated by 10% on its way to 30%.

    I have a friend who is constantly buying land in Oklahoma. He has millions of dollars in it. He’s been getting cold calls from real estate brokers asking if he wants to sell.

    Months ago I read that Jeff Gundlach wanted to buy a ranch but couldn’t find one. Brokers weren’t returning his calls. I wasn’t too concerned. Probably just another billionaire looking for 50,000 acres. Now it’s trickled down to the little people.

    I’ve been debt-free for 15 years but with inflation running hot and mortgages low I was going to leverage the purchase but circumstances didn’t allow for it.

    Might run that play again but this time without pressure so I can finance it.

    • Michael Gorback says:

      “nonresidential estate services” should be “nonresidential real estate services”

    • Alku says:

      Was it a homesite? Did you buy it as a second home?

      • Michael Gorback says:

        I was looking for hunting land. I knew that at some point I’d need some amenities like shelter, electricity, and water. Lest you conclude that I can’t “rough it” the current lease is a one-room shack with three sets of bunk beds and no electricity or water. We haul in our water and run generators for electricity. We use an outhouse. It’s hard to enjoy the peaceful woods with a generator running but this Texas and you need AC.

        So I was looking for raw land where I could run electricity and either tap municipal water or drill a well. Wells can cost $15,000-$25,000. You can forget sewer. You’re going to put in a septic system.

        Then you need some roads to get to the hunting stands. You need to cut a road to the home site too, even if it’s just a trailer hookup for electricity.

        So you have to factor this stuff in. If you can get municipal water or join a water co-op you can spend more on the land and save on drilling costs. This place is on co-op water. By law, co-op water has to be tested annually. Beats drilling a well. And no expenses for putting in septic, water or electricity. It’s all in place.

        I toyed with the idea of a campervan, teardrop, larger trailers, RV, and mobile homes. Campervans, trailers, RVs, and mobile homes have become rather expensive and for the most part I don’t think the construction quality is very good. Teardrops and campervans are cramped and you’re still in outhouse mode (unless you’re converting a Mercedes Sprinter), probably involving a fancy camping toilet (glorified bucket). I went back and forth on most options that required towing because then I’d need someplace to store it. Storage not only adds to the cost,, security isn’t great and these places get plundered.. I’d also need something to tow it, like a truck. Good luck with that.

        Suddenly there’s a listing for 20 acres. It has pictures of a nice cabin and there’s also a spring-fed pond stocked with catfish. That’s maybe 2 acres. The rest is woods and the trails they cut were like highways compared to what I’m used to.

        Overall, it looks like the owner put a lot of love and hard work into the place. There was a tractor in the barn which accounts for the nice trails. I bought the tractor too. You need to keep the trails graded and then sometimes a tree falls across a trail or something. It also has a bush hog for mowing but I think I’ll put some goats out there to do that.

        So what happened was I was looking for raw land to develop into a primitive getaway over 1-2 years and this dropped into my lap, in turnkey condition. Personally I think it was way underpriced.

        I’m having the septic checked. This week I’m going to view the the property in an ATV with the seller, not so much to look for unpleasant surprises but to get a feel for how he managed the place.

        My realtor does a lot of land deals all over Texas and she can access data better than the NSA.

        • Old School says:

          I think you did well. I never want to get involved in developing residential real estate because it’s too easy to run into unforseen cost over runs. Better to buy it with the shack on it and enjoy your time outdoors.

          It’s kind of a guy thing to try to live a basic lifestyle once in a while. Too much granite and marble can make you feel like a sissy.

        • Cas127 says:


          “You need to keep the trails graded” etc.


          You’re harshing my raw land fantasies…

          All this…work, for pretty much undeveloped land.

          On a more practical note, when you are in the “back of beyond” how do judge proximity/accessibility to common use infrastructure (electricity, maybe water, etc.)?

          Do rural counties run infrastructure along “main” roads, even if thinly populated? I had kinda assumed that while rural land can be cheap, running infrastructure to it might be nightmarishly expensive.

        • Old School says:


          I have a friend that has on a river with about 20 others. It’s about five miles. They are served by electrical coop that was chartered many years ago to bring power to rural homes. They are at end of the line so to speak of the grid so are vulnerable to not having redundant feed if things go wrong.

          Big problem for them is no high speed internet and poor cell service. They finally installed a small tower with cell antenna, but you still aren’t going to be streaming much

        • Paulo says:

          I read your raw land comments and smiled. I have 16 acres and let the trails go for 2 years.

          Today? What trails? Mind you, this is on the BC Coast and stuff grows so fast you can watch it change. Last week I had a backhoe in and cut a new road. Today I’m seeding it with grass. The elk should love it. :-)

          Reply to musing down below on rural services. From my experience there are few roads built that go nowhere. This means services follow the road. For power you will have to pay for a transformer $1500, approx $1000 service call for the hook up, electrician for your own pole (poles) for a drop and meter, then either a temp panel or a finished hookup on site with appropriate number of ‘certified’ poles. (Have to be safe and climbable). Usually a simple installation is at least $10K for materials and labour. Luckily, my son is an electrician and contractor so that didn’t happen for me.

          One word of caution. In the boonies it is possible to get a neighbour who is poor and decides to run a generator instead of paying for a hydro installation. The noise can be incessant. I’ve seen it happen to others.


        • Michael Gorback says:

          Old School, why didn’t those folks on the river get a dish for internet? Hook it to a wifi router and get a cell phone that can make calls over wifi.

        • Tom15 says:


          Most of the counties I work in are very rural. All took advantage of rural fiber grants.

          Can be the only single wide on
          Chicken scratch hollow road and your connected.

        • Old School says:

          Michael, not sure. They tried everything including Hughes satellite for some reason. They are in small mountain territory, where sometimes you really walk up the hill to get a cell signal.

    • Lynn says:

      Just out of curiosity, what are yo0u going to do with it?

      Also, did you go see it in person? Did you have the septic checked out?

    • David Hall says:

      In the 50’s and 60’s they subdivided large portions of SW Florida. There are about 90,000 vacant lots in Lehigh Acres alone. Cape Coral, Port Charlotte and North Port have tens of thousands more vacant lots. The regional population is growing. The lots have road frontage. Some have electricity nearby. Fewer have public water and sewer. I was worried about hyperinflation and bought two lots. More recently I counted vacant lots from articles online and Google Earth satellite photos and estimated there are over 200,000 of them. I did not get a monopoly. The area has seen boom bust speculative cycles. During 2012 it seemed like a house for sale sign on every street.

      • Michael Gorback says:

        The Florida land deals from the 50s and 60s run neck and neck with selling the Brooklyn Bridge.

        No electricity is a deal breaker unless you’re going solar. Shouldn’t be a problem in Florida. Water and sewer can add to your costs. As I mentioned drilling a well is very expensive and septic varies from less than $2,000 to over $10,000 depending on size and materials. The national average is about $6,000.

        I used to have a second home in NM. It was a bank foreclosure, maybe fallout from the dot-com crash. A lot of people bought vacant lots for future retirement. Suddenly some company from Florida was blitzing the airwaves about our area and prices went vertical. Then the GFC hit and people just stopped paying taxes on their land and let the government have it. Jingle mail without the jingle.

      • VintageVNvet says:

        Had a coworker in TPA in 2002 who had worked for General Development right out of college in the era to which you refer:
        He was a finance grad from UF, ( also a running back for the Steve guy, ) and was working full time back in those days to help/allow folks to buy those lots for nothing down, or very very little,,, and the interest was where GD made their money..
        Those developments were all over FL, not just in SWFL, but you also don’t include ”Golden Gates” in Collier county that had thousands also..
        We bought a half dozen in NP as a side bet in ’98, sold them for a 300% profit a few years later, and those buyers sold them for 500% a couple years after that…
        The basic and bald truth is that FL is totally,,, totally ”flocked” NOW,, and will only continue to get worse and worse, in spite of the very obvious advantageous of SOLAR powered everything coming soon to at least almost everywhere…
        Until and unless FL passes legislation mandating ”total carbon, waste and other crapola” local limits/controls, as in NONE out of any home,,, like that will ever happen with the total control of the FL legislature by the ”developers” eh
        Just consider the degradation of the Oglala Aquifer if you care to consider the very very dangerous contagion/corruption of the human environment,,, very similar to the long term and continuing corruption of the political spectrum in Tallahassee as well as the rest of FL.

      • Bobber says:

        I checked out that area around Cape Coral in 2012. You could easily buy a brand new 3 bd/2 B spec house for $80k to $100K on a decent size lot, but the half the neighborhood was vacant lots. If it had Chinese drywall, you could get the same house for $50k and have it re-sheetrocked.

        I was thinking of buying some and renting them out, but the rents were only $800/month, with high risk of getting non-paying tenants and damage.

        • Michael Gorback says:

          If you can find sheetrock. I have a friend who’s fixing up a house. Work stopped due to no sheetrock. That was a while back but planning on renovating or building is a crap shoot. Look at the auto bottleneck due to chip shortages.

          Who knows where the next land mine is? Grout shortage? Tyvek?

    • Depth Charge says:

      “I saw it Sunday and started to prepare my haggle strategy. Monday morning my real estate agent told me they had 5 showings scheduled just for that day.

      Strategy changed dramatically. I immediately put in a bid for full asking price, cash. I was gambling that some people might try to haggle the price 10% or would offer full ask but had to finance. My bid would be the most attractive unless someone bid over the ask. Two other parties entered bids right away.”

      FOMO right here, ladies and gentleman. Like putty in the hands of a REALTOR. They saw him coming from a mile away. That was easy. CHACHING!

      • Michael Gorback says:

        Thank you for your nice schadenfreude fantasy.

        Please note that you can lose your real estate license if you do that. Is it worth doing for the commission?

        Your theory doesn’t hold water. I put my bid in first. There was no reason to play me by telling me they had two other offers AFTER I had already committed. There was no hard sell. The listing agent didn’t even bother to show it. He gave me the combination to the gate and the key lockbox. The other 5 showings were other realtors.

        The property was seriously undervalued and still a discount at full ask. The value of the land was probably 70% of the asking price and I’d seen similar undeveloped land going for more. Calculated cost of clearing, running utilities, septic, and building a house went way past what was left. Again, assuming you could build the house at all and at what cost given the inflation in building materials.

        Let’s say the ask was $500,000, of which the land was worth $350,000. Do you really think you could put a decent house there for $150,000 given the cost of site development? Mobile home prices are up 39% in the past 12 months to an average of $75,000 for a single-wide and $143,000 for a double-wide.

        And this “ripoff artist” threw in the ATV for free after the sale.

        Add in the sweat equity of doing this from raw land 2-1/2 hours from the site. I’m done empire-building. BTDT, got the shirt.

        I had guidance from a realtor who does a lot of land deals as well as a friend who has accumulated millions of dollars of raw land.

        I didn’t just fall off the back of the turnip truck, but if it makes you feel better think what you want.

        • Depth Charge says:

          You’re buying at the pinnacle peak of the biggest real estate bubble in the history of mankind. I hope you stick around so I can remind you of your folly for years to come.

        • Michael Gorback says:

          DC, you can stop now. This is undeveloped rural land. It’s not residential. The nearest town is 900 people.

          The valuation factors are very different and I doubt you have an iota of experience with it.

          I’m going to enjoy the hell out of this bargain while you dine on sour grapes.

        • Wisdom Seeker says:

          @Michael –

          I bought that the pinnacle of the previous biggest bubble. But it was the right place at the right time, it was within our means, and it worked out.

          I think you made the right call. So long as you’re not in a position to be forced to sell, the future pricing doesn’t matter much.

          It’s unlikely your cash will be generating a meaningful return elsewhere for a while either.

        • COWG says:

          If you’re buying it, can afford it , like it and are going to use it for personal pleasure, I don’t see where it’s my place to tell anybody they over / under paid for any thing…

          Who knows… Michael might shoot a hole in the ground and find oil… and change his name on this site to Jed…

  19. Nonya says:

    Fed can pull the QE punch bowl all it likes, but it is too late. The damage has been done and downward spiral to the pain pit has started.

    • Depth Charge says:

      The FED’s not taking away the punch bowl. Weimar Boy Powell has decided to QE all the way up to, and through, a bubble and bust.

  20. AdamSmith says:

    Inflation is forcing big life decisions fast….
    1. Sell my F 250 quickly and get down to Prius only, rental in emergency means: Less insurance, No DMV, Less Fuel.
    Can rent truck at HomeDepot for 20$ an hour use on late evenings when no one around and no one on the road.
    2. Quit my part-time business.
    3. Cut extra cell phone line.
    4. Rarely going out to eat anymore.
    5. Learning how to everything I can do myself on Youtube.
    6. Switching to free or cheap software like Libre instead of Word.
    7. Selling many little things to downsize for old age.
    8. Negotiate when buying everywhere I can.
    any other suggestions from this motivated and experienced crowd?

    • drifterprof says:

      Put significant effort into staying physcially healthy.

      • AdamSmith says:

        Yes, just had a serious heat stroke on my ranch. Have great medical and hard work in the summer sun (well, now in the summer shade here on) and was at the hospital in 20 minutes. But the ambulance ride injured my rib. Oh well,
        9. Look for serious deals online for all computer gear.
        10. This website reminded me to look at Goodwill. I did and found a PGA golf shirt in excellent condition at $5.99
        11. Pay cash when possible to get discount
        12. Trade with neighbors, businesses, friends
        13. Go to all the estate sales of dying boomers

        • Red says:

          Florida and Texas must be a gold mine right now, Go to all the estate sales of dying boomers.

        • Wolf Richter says:


          “dying boomers” hahahahaha, we’re not ripe yet.

          You need to be patient. Boomers are now between 55 and 75. Those that are 75 today have a remaining life expectancy of 11 years for men and 13 years for women. Boomers that are 55 today have a remaining life expectancy of 25 years for men and 29 years for women. But it’s always a good idea to do some long-term strategizing :-]

        • Phleep says:

          I bought and stored lots of consumer items I know I’ll use anyway. Checked supplements last night (I have 10 month supply ahead) and they’ve almost doubled in 3 months. Have super-simple workout-fitness gear that doesn’t wear out. I walk-run with hand-weights I’ve used for 15 years. (Work up to that! Sudden action with those can injure.) The key is to learn the skills with simple exercise and especially habit formation that keep you healthy. Overbuilt gizmos are completely unnecessarily, energy-wasting and possibly subpar for health. I live where I can walk in woods without getting in a car, yet in a city. I am skeptical about a hunting-gathering hopes scenario as the land will be scoured — I want walking access to stores. Am about to walk a couple hours which is customary though pals (around retirement age) are falling apart physically (one crucial pillar in three: physical health, mental health, financial health) from over-reliance on their laxity and conveniences. Their bloated pensions will not save them. I’m expecting tax hikes on top of everything else when the gov senses this budgeting is falling apart, and finance starts getting pulled.

        • Anon1970 says:

          14. Get yourself an Amazon Firestick for your TV and learn how to program it. Then cancel your cable/satellite TV subscription.

        • COWG says:

          Newer LG TVs have many of those free services/programming built in as channels you select with your remote ( channel-up/ channel down) just like over the air if you don’t want to fiddle with the fire sticks… movies, news, music…

    • Lynn says:

      Buy a used large chest freezer- not too old, you want to use less electricity. Or, I found a dented display one at 3/4 size for half price. Buy large amounts of stuff on sale- but make sure they *really* are on sale. Meats are good as the prices fluctuate a good deal. Preprocess some stuff and freeze it so it’s easier to cook. Freeze water in soda bottles when the freezer gets low- uses less electricity. Buy rice and other staples in 25 lb bags. Kept dry and airtight white rice will last 25 years. Brown rice- not so long.

      Cut out any “pay for” TV and watch movies online. Although- I have a good monitor- YMMV..

      Buy everything that you can used except jeans, shoes and tires. Learn to judge conditions and manufacturers.

      A flip phone can qualify for a much much cheaper plan with some companies. Go to your phone company’s outlet and ask in person.. I found a military grade flip phone used on ebay for far less than new. Never buy a phone from your phone company..

      Try to trade labor for things you can’t do.

      Rent out your garage to someone with a small business, if you have a garage- easier than a roommate. Or, get a roommate.

      You tube is awesome. I learned how to do roofing, build a computer and took my throttle body out of my car and cleaned it last year- saved about $600. I so hate working on cars though :\ That was really stressful.

      • Old School says:

        My parents bought a large freezer on credit just after they got married and still live a lifestyle of freezing nearly everything. It is just under 70 years old and never been serviced. I think it was around $225 about 70 years ago when a new car was around $1800.

      • AdamSmith says:

        Good ideas here. Wife already messes with roku tv and we have not had cable for decades. I take classes at the local community college now taking them in horticulture.

        I have many land options as in boarding horses, building a small rental unit allowed by my zoning. I can lease out my back property to a horse boarding/training facility as well. Problem is California is liability on steroids. Most likely will relocate to less expensive in California as California still has the best medical and most to do for someone who has a need for lots of interesting things to do….
        Inexpensive housing in CA does not even exist in the ‘hood. Just look at Compton, Ca to see what I mean.

        Condo for the future likely. Closest to the ocean as in Vista or Oceanside is not totally out of reach.

        My take as of this moment is investing and especially investing as a retiree is almost a waste of time for most. Too fast moving, to many moving parts, too many shenanigan’s. Note that my background includes CPA auditing of books of all many of business such as start ups and well-established. Like Adam Smith said in “Wealth of Nations,” most businesses (and I add investors to this term) will not be around as Smith noted in looking at small businesses constant changing (and that was a couple of hundred years ago in England).

        Who can compete with computer algorithms that sop up every ounce of money at every point in the game. Just take a look at buying and selling real estate. Most here will not have a clue how detailed and in-depth the data available gives investors every edge.
        For example, I have a neighbor who is a wealthy flipper. He was scouring the neighborhood to develop a list of future prospects by acting like the friendly neighbor and he admitted to me he was waiting for the older people to have some catastrophe and swoop immediately, His problem is he is such an asshole people cannot stand to be around him. He already approached on neighbor with two offers while he is having bladder cancer treatment. Really classy guy. I have neighbors that are at the highest level of the economy as in nationwide businesses known by anyone in America and most have small to medium businesses or are in high paying government jobs with 25% or so retired. Most do not seem to get a clear picture of what is happening to their capital and what the future holds.
        (neither do I but at least I am trying to get a picture of the “beast” as it moves).

        Bottom line, I am quite fascinated to see so many here who are thrashing about trying to understand all this in a “Big Picture Way” but seems impossible as the beast changes every day.

        Wolf masterfully navigates like the sailboat he has (I had a small 4 man racing sailboat and love it still) taken his “sailboat” of this website and takes us all on an informative journey on the insanity now enfolding. All my years of education in collecting graduate degrees all the while using the “cowboying metaphor” as my touchstone has helped me see this is just like a big rodeo with the “Bull” riders giving the best entertainment. Most may think this negative and sour but most cowboys I know (and that is only about 2 out of hundreds met in my ranch businesses) speak very candidly with home spun wisdom on pare with the “Wolf.”

        So Wolf, tell us the back story of your name…. ” owwwwwwwoowoowoowooo

    • Michael Gorback says:

      No land line, use your cell.

      Dumpster checks. When the rich foreign students graduate they just leave their stuff. My daughter furnished half her apartment scrounging around the high-priced dorms.
      Found a 50″ flat screen in perfect condition. You don’t have to dumpster dive. Rich kids won’t lift that high. They just set it on the ground.

      No cable TV. Either an antenna or internet plus a Roku. Lowest tier internet speed is plenty for streaming.

      Check YouTube for videos on inexpensive hydroponics. I’ve been growing veggies for about 12 years. Most veggies are simple. Is it worth it? Besides the improved color, size, and flavor, between 1939 and 2021 the annual price inflation for lettuce averaged over 4%. Found that on the BLS site.

      A lot of produce can be regrown. It’s ridiculously simple.

      • Michael Gorback says:

        If you go out to eat don’t buy alcohol. The other day I was out running errands and stopped to get lunch. The tab for pasta bolognese and a side Caesar was $17. I just had iced tea. If I’d had a glass of wine it would have been 50% more.

        • El Katz says:


          Yesterday, I scored two 6 packs of Shiner Bock for $5 each (normally @ $8). One bottle at the local watering hole is $5.50.

          Sort of puts it into perspective.

        • Anthony A. says:

          Wife and I are in our late 70’s. We eat two meals a day and usually go out somewhere. Wife is handicapped and on O2 100% of the time (COPD). We can get a decent breakfast at a local Denny’s for $11.06, total bill, after discounts (My military @20%). Add $3 tip and it’s under $15 for the two of us.

          We skip lunch or just have some fruit or yogurt at home. Sometimes, for dinner, we go to a local, non-chain, sports bar and split a plate (chicken, meat loaf, vegetable, etc) and have water or tea. That bill is usually ~$20 (with tip) and we can watch the Astros game with friends.

          As you say, no alcohol is the key to keeping costs down as a glass (6 oz) of cheap wine around here is now $8 – $12, depending where you are. Crazy!

          During the pandemic, I cooked a lot (grilled outside) and that worked, but we got cabin fever, big time. We like to go out and socialize with friends/locals. Plus, my wife needs the activity and can’t stay in the house forever pushing a walker and chained to a hose.

          We are still not ready for a visit from “Red” (above). LoL!

        • VintageVNvet says:

          Depends MG:
          IF you like or love your local or otherwise most beloved restaurants as WE, the family we, do,
          Absolutely buy the overpriced alcohol because it is sometimes the only ”profit” making item on their menu…
          Even when we could not GO to our fave restaurants and had to order out, etc., we would include a bottle of their clearly, at the time, overpriced wine,, so we could be sure they were able to make a profit and pay their personnel…
          Surely, its easy as can be to go low and enjoy SOME stuff from each and every place, either delivering or take out,,, but they, the folks who focus on the really GREAT food, will not usually make a clear profit without the alcohol…
          just have to look clearly at Spengers and similar, back in the day, to see this metric…

      • AdamSmith says:

        excellent idea on the high priced dorms….
        Around me is Redlands University, Claremont Colleges, UCR, Loma Linda University, Many the top colleges in SoCal are within 2.5 miles of my house so all I need to do is look at each schools academic calendar and find out where the High end dorms are plus I would look at high end apartments nearby.
        Vegetables also, and taking agriculture classes now to learn about just for fun.

      • 91B20 1stCav (AUS) says:

        MG-a couple of commo caveats from one who’s patch is mostly offgrid, and has been since the ’70’s.

        Cel service can be variable/unreliable in a deep rural-area due to fewer towers (too-few customer revenues to amortize construction/maintenance costs) limiting that access, and even worse in areas with high relief affecting line-of-sight to a tower.

        VOIP through your sat-modem, or even cutting your landline phone only for cel runs the risk of a 911 call to your local VFD not being properly directed or connected (granted, you may be out so far in isolation that there’s no VFD to back you up). This was the case when Verizon, who purchased our local half-horse copper-line non AT&T legacy phone company, encouraged us to go full-cel, assuring us that the service would be better. They did nothing, however, to expand the bandwidth of the one existing local tower, or add any others, resulting in greatly decreased general phone service and VFD calls being routed to a VFD two districts away. Returned to our landline service augmented by our local GMRS radio net for emergencies in our high fire-danger area. (Verizon subsequently resold the local company to another half-horse firm…).

        YMMV, as anywhere, but worth a check if it could be a concern.

        may we all find a better day.

  21. CRV says:

    These YoY percentages in graph 2 are so deceptive.
    Let me show you.
    Lets 2017 as a starting point and set that at 100 and look at the red line.
    2018 was 5% down.
    2019 was 5% down.
    2020 was 10% down.
    2021 is 20 %up

    Now do the math: 100*0.95*0.95*0.90*1.20 = 97.5.

    According to this calculation intermediate demand prices should be lower now then in 2017.
    To the untrained eye it looks like prices are 15% higher now then in 2017.

    These are rough readings. When you take smaller increments you might get a significantly different outcome.
    Graphs can be so deceptive.

    While in reality we see, or should I say feel, retail prices to be much higher.

    I don’t know what is real any more.

    • historicus says:

      “I don’t know what is real any more.”

      It’s not what things are worth…..we cant figure out what money is worth!
      People want money, but if it sits, you get punished by the promoted inflation
      We must all remember …
      Low rates…..a decision by an unelected body

      Inflation…promoted by an unelected body supposedly held to “stable prices”

      High Inflation…….unaddressed by the same unelected body

      Who does the Fed serve? Apparently NOT the working, earning, saving families of this country.

    • Wolf Richter says:


      Year-over-year is how inflation is measured (the primary way), not year-over-4-years-ago.

      Yes, there were price drops in prior years, but 2017 is irrelevant today. What this chart shows is inflation pressures further up the pipeline. What is different compared to prior years is that today these inflation pressures are getting passed on. In the past, they couldn’t be because buyers refused, and instead were eaten as margin compression, which quickly killed the price hikes.

      It’s a different world today. You can delude yourself into thinking that this is just like 2017 or whatever. Fine with me.

      Here is the same data expressed as index value, rather than year-over-year. So you can see the current price craziness compared to the longer term:

      • ru82 says:

        Hi Wolf – I wonder if shrinkflation helps lower the CPI or make it look more tame than it really is?

        I noticed that the 32 ounce bottle of Gatorade that has been in convenient stores for years is now 28 ounces. In this example, the price of 2 for $4 stayed the same but not the amount of product you receive.

        That is a 12% size reduction. So the price stays the same but inflation is really 12%. Maybe they shrink the container 12% but drop the price only 5% and this would make it appear that CPI is actually lower?

        I see smaller packages everywhere. Smaller cereal boxes. 12 packs of water are now 10 packs….etc.

        • Wolf Richter says:

          Yes, packages are getting smaller. We see that everywhere. We discuss it over the dinner table. And we use “shrinkflation” to describe it.

          But it’s actually a misnomer. For CPI purposes, they don’t count the package, but the contents in terms of weight. If your package of frozen albacore went from 16 oz to 13 oz, the CPI process figures the price per oz. So the package size has no impact on CPI.

          But it does keep products below a certain key price point, such as below $10, or below $8 or whatever, in order to avoid shocking consumers. It seems to work pretty well or else they wouldn’t do it.

        • Depth Charge says:

          “It seems to work pretty well or else they wouldn’t do it.”

          I wholeheartedly disagree with this. I hear nothing but complaints from people. The only reason it “works” is because there’s no alternative sizing available. It’s either buy the reduced size or quit buying the product.

    • AdamSmith says:

      There is a famous book in the world of statistics titled “How to lie with statistics.”
      Bottom line is overall things are much higher and it is so overwhelming that many companies are make covid and other excuses to inflate income.

      My retirement income is higher than most and I can clearly see what is happening because of it. Can refi now but am afraid the 60k pulled out will be worth 48 in purchasing power by next year. I planned to wait until construction goes down but does not seem likely for years due to new 3.5 trillion “infrastructure” bill so I may not do the refie and just wait.

  22. Anon1970 says:

    Major wars are usually followed by periods of inflation.

  23. SocalJim says:

    I have give up on America. Last November, we all learned that the entire political system is corrupt to the core. It is hard to imagine how anyone can deny this.

    I rarely leave Newport Beach anymore. I don’t work anymore. I just take care of my gardens and spend afternoons at the beach. Something needs to change and until it does, I have checked out.

    • Old school says:

      DC is like any organization. It tries to grow and increase its influence and power. They have consumed nearly the whole world. Before WWI US didn’t have one military base on foreign soil. I think it’s above 200 foreign bases now.

      Power to create money allows them to dominate states and individuals. Now it’s increasing surveillance and it’s going to be more carrots and sticks to make you behave.

      • roddy6667 says:

        Rome did that, but eventually the cost of supporting an empire caused it to collapse.

        • AdamSmith says:

          I bought and sold military surplus from 2012 to 2016 and the amount the U.S. paid for its gear was amazingly outrageous. I saw the manifest of each item I would buy.

          In one example two special forces speed boats with two perkins diesel were purchase for 75K WITHOUT the trailer which would have been say 20K each. One sold for 14K the other for 11K. I tried to get my father-in-law to go in with me on buying one and outfitting it for deep sea fishing adventures in a business called “Assault Sport Fishing Adventures.” He laughed so it was no go….

          I once bought 1000 sleeping bags and bivvies’ at $1 dollar a piece and each was original price of about 100K. I sold all at 10 to 20 dollars a piece. Some were new and had to dome repairs on many but it was a killing.

          In Barstom saw rows and rowsand rows of humvees and Catepillar construction gear selling for about 5K just to get the diesel motors.

          The best deal ever was buying, on the Pacific Coast, Atlantic Coast, and Hawaii/Guam 10K giant Zodiac boat motors (now likely 15-20K) names like Mercury, Honda, and more for about 300 to 600 dollars each.

          An old guy from Oklahoma told me he would buy ten at a time trying to get say all the Hondas or Mercury engines, then completely rebuild as many as he could from all the parts, sell them and sell the remaining parts to a network. Then, find, buy, repeat…. This model worked for many other items I would buy in bulk.

          Imagine the billions that could have be sold and salvaged if anyone would have done this in Afghanistan.

          I wonder if the Roman’s ever did this….

        • 91B20 1stCav (AUS) says:

          AdamS.-you would need to be a pretty-good sized player to have profitably-funded/influenced recovery ops for Afghan materiel (a LOT of really good, and really HOT steel still sits on the floor of the lagoon of Bikini atoll, if one worries about the ‘waste’ of war…). Or, as i recall discussions about NASA ‘firing money off into space’ and the rejoinder that ‘nah, the money stayed right here on Earth…’.

          Know from my time in the moto-biz that the excellent quality steel found in a certain Thai sprocket manufacturer’s products once graced the chassis of the many M48/60’s & M113/116’s, etc. that were left in the former RVN (for the conspiracy-minded, have also heard that the mysteriously-disappearing subsea wrecks of HMS Prince of Wales and Repulse might also be a source).

          may we all find a better day.

      • VintageVNvet says:

        286 was the last # read OS,,, but maybe, just maybe, at least a token of reality has seeped through to our guv mints,,, or at least some of those entities;
        As for what appears to be the case these days at ALL,,, repeat ALL levels of guv mint we see massive ignorance of the basic duty of elected AND appointed guv mint folks to represent the interests of ALL the people.
        Several obvious reasons, eh:
        #1. ( now, and approximately the last few thousand years from what I read, as I was usually not able to attend, eh ) , WHO PAYS ME.
        #2. How clever can I bee to say what needs to be said to be elected or appointed,,, while being able to at least majorly if not totally deny the obvious implications after being elected…

        #3. Please help me out here for a while,,, ”dinner” or, as you young folks call it these days, ”lunch” is ready..

    • Kerry says:

      Amazing to me that hardly any people comprehend what is actually happening. Everything is being inverted. Lies everywhere and truth mocked…

    • MonkeyBusiness says:

      Lots of people have known for A LONG TIME that the political system is corrupt to the core, but you only knew last year? I guess there’s a benefit to living in Newport Beach after all.


      • AdamSmith says:

        This has been true since he beginning of time so why do you think you have had an amazing realization. I just have to ask if think it has every NOT been corrupt in any government endeavor?

    • Escierto says:

      Wake up! There are 22 registered voters in my extended family including several veterans. Biden 22 Trump 0! That’s how it happened. People hated that wannabe dictator!

    • Bobber says:

      We’ll need specifics for your fraud claims.

    • Anthony A. says:

      If you think it is bad now, wait until they come to confiscate your guns and ammo.

  24. David Hall says:

    I wanted land outside of a flood zone.

    I bought one lot in a deed restricted community; minimum house size allowed is 1800 sq ft. The HOA does not allow weeds in people’s yards, nor boats parked in the yard, sheds, etc. It comes with county water and sewer. There is a 2500+ sq ft home across the street.

    My other lot is in a lower income area also seeing new houses under construction. It is close to a Walmart. Some houses there have garages some do not.

  25. Depth Charge says:

    I just read this comment about the auto industry’s woes with chip shortages:

    “Probably we will remain in shortages for the next months or even years because semiconductors are in high demand,” Herbert Diess, CEO of Volkswagen, told Bloomberg. “It will be probably a bottleneck for the next months and years to come.”

    So this clown is now saying it will last “years.” That’s a broken business model, buddy. You should be fired.

    • Sams says:

      Is it?
      Limited supply often work wonders for profit…

      • Depth Charge says:

        Their profits are getting killed. When you can’t build product, you can’t sell it.

        • Sams says:

          But if they can build only half as many and build only those that started with the best margins?

          A guess, VAG get more than tvice the revenue on a top spec Audi compared to a base level Polo.

    • Rowen says:

      The auto chip shortage is as bad now as ever. The guys that stockpiled (Toyota, Chinese EVs) are now out. Pretty much everyone has announced production stops starting this month.

      The problem is that the Chinese chip ban has created an impossible situation for the entire industry. No one wants to commit their own capital (taxpayer capital, yes) to expand, and then get rolled when the Chinese become self-sufficient. Word is that they’ll be self-sufficient as soon as early next year at 14/28nm, which were the bulk of the 350B in chips that they imported.

      • Depth Charge says:

        I think we’re at the peak of the shortage. In the next several months I expect the auto manufacturers to be up and running to capacity again.

  26. Depth Charge says:

    “Just in time” inventory, which was always never in time, is now “wait 3 months for a computer or cell phone, 6+ months for a car.” What an abject failure of a business model. Offshoring our manufacturing base to Asia brought the country to its knees.

    • gametv says:

      The problem is the lack of true competition in our markets. We really need a policy to bring production back to the US, but also to broaden out the competition to more competitors. Any system that is monopolistic is rigid and fragile. For example, biological systems or species that are not diverse may not survive a shock to the system. Same thing for businesses.

      I think that food production, which is generally more localized and diverse in suppliers, has done a pretty good job of navigating through these tough times.

      • 91B20 1stCav (AUS) says:

        game: thus the effects of the current vogue favoring ‘efficiencies’ of concentration over any ‘resiliencies’ of diversification…

        (i like the final two sentences of your first paragraph, illustrating a seemingly widespread perception that our species is somehow exempt from the forces that gave rise to the ‘biological systems’ riding this space rock…).

        may we all find a better day.

    • El Katz says:

      “Just in time” turned into “Whoops! Too late!”.

  27. Consumers will “NOT” pay those prices. Economists make light of fungible hedonics, but its real. If consumers pull back, the economy goes into a recession and corporate profits tank. They can’t afford that. Buyers at the major chains now control inflation at all levels, especially middle men. The only inflation is shortage induced due to the surge in fiscal spending. As per Lacy Hunt, the inverse reaction will drive prices lower. Mike Wilson of MS calls it Fire and Ice, and he weighs in on the side of ICE, consumers pullback and GDP falls. Holding down interest rates too long was the problem. They taper too late and we end up with stagflation. They have to raise rates first or risk mispricing the market by a lot than they already have. That should panic equity holders.

    • Sams says:

      Some consumers may not pay the price. They may not even be able to pay that price.

      On the other side, how to maximize profit. Reduce price to increase volume with a lower margin or keep price and sell less volume at a higher margin. It is only down to what approach that maximises profit. Prices do not have to come down if high price maximise profit.

  28. Xavier Caveat says:

    Go to any new car lot, and it has the look of the Trabant dealer in East Germany with a half a dozen new cars on display, all sold already.

  29. gametv says:

    Wolf – I have a question for you.

    Let’s assume that the Fed simply cannot get away with increasing asset purchases beyond their current level of $100 billion a month, or actually must decrease it below that level due to runaway inflation.

    Does the Fed have another way to hold down long term interest rates?

    Long term interest rates are set by supply and demand in the market, right? The Fed has used asset purchases to drive down interest rates. It is just adding to the demand side of the market balance.

    Now, once the debt ceiling has been cleared and the Treasury needs to increase issuance by $400 billion or more per month (to catch up and also to finance the approximately 250-300 billion that it has been draining from the Treasury general account to fund deficits) the supply takes a big step up.

    We have seen that most governments had stopped asset purchases. Japan is not buying US Treasuries, China is not, no other central bank is a big player. So we have only investors and the US banks.

    If interest rates around the globe are moving higher, wont Treasury investors want to get higher interest rates?

    I know that the Fed can use reserve ratios as a way to reduce the money supply in the economy. By increasing reserve ratios, the Fed can reduce the amount of money expansion that happens when banks make loans. But it seems that banks have more liquidity than demand from qualified borrowers right now. They are swimming in liquidity, and so would higher reserve ratios even really reduce the monetary base?

    So how does the Fed hold down rates in an inflationary environment. It seems to me that all markets are operating under the premise that the Fed will come riding to the rescue. What if they cant do that due to inflation? What am I missing?

    • Wolf Richter says:


      “….actually must decrease it below that level due to runaway inflation. Does the Fed have another way to hold down long term interest rates?”

      The way to combat inflation is to push up long-term interest rates (end QE). That is what needs to happen first, and then short-term interest rates can be raised, while long-term rates continue to rise. And then the Fed can start unwinding its holdings.

      Pushing up interest rates across the yield curve is the classic way of fighting inflation, particularly long-term rates because they have a much bigger impact on the real economy.

      The idea of fighting inflation is to bring demand down, and higher interest rates will eventually do that. But there is a lag of at least a year before monetary policy shows impact on inflation. So these are not instant solutions. And until there is any impact, inflation is going to run wild.

      A big stock market crash could also bring demand down, and has in the past (2000), and would also take at least some of the fuel away from inflation.

      • David Hall says:

        I heard a Fed speech. The Fed has some control over short term rates, but long term rates are subject to supply and demand.

        On the other hand, if they are buying long term bonds and MBS, they might lower long term rates. ZIRP and negative interest rates in Europe may have a negative affect on U.S. rates as people shopped for positive yields.

        • Wolf Richter says:

          Yes, supply and demand, where the Fed is the relentless bid. It totally dominates the MBS market. And it’s a massive buyer in the Treasury market. That is precisely how the Fed manipulates long-term rates. And everyone knows it and plays along. The expressed official purpose of QE is to LOWER long-term rates.

      • Sams says:

        The only drawback with high interest rates is that they do expand the amount of money. If interest rates are kept low and default rates made high there would be monetary deflation that may quicker tame price rises, that is consumer price inflation and asset price inflation.

      • Yort says:

        The second and easier way to “fight” inflation is to print more money and send it to everyone to pay the inflated prices…commonly know as “extend and pretend”. Also dropping interest rates to negative would “fight” inflation in a transitory manner. This is exactly how the govt and fed have been fighting inflation for the last 10-20 years (eg – college inflation, healthcare inflation, housing inflation…cheaper and cheaper loans an mooore free is a “transitory fix”!). Sure “Fighting” inflation by printing money creates more inflation, yet as long as everyone does it across the entire world, it is somewhat zero sum and can work for a very long time. Plus the Fed can at some point just say 4% inflation is optimal, as there is no valid reason why anything above zero percent makes logical real life business sense beyond inflating away excessive debt and hurting savers (who make productive investments(so I guess you could say the Fed is anti-productivity…and thus anti-GDP?!?). So 2% or 4%, the higher the better according to our village idiot fed…

        What should have everyone concerned right now is it is looking like China and America are not going down the same fiscal and monetary paths as of this year, so now we are NOT a zero sum planet, and so there are options and choices for where people want to invest and store their money (until govts stop our ability to do so, which is a risk in itself). Not many are discussing China/America…yet it is key to the future of the planet on many dimensions as if the only two superpowers and largest economies on the Earth are not on the same page for very long, the financial, market, currency, manufacturing, rare Earth resources, energy, etc “Soft Wars” will be just as bad, if not worse, than troops on the ground WW3 (which would actually be great for GDP…sarcasm)…

        • COWG says:

          “This is exactly how the govt and fed have been fighting inflation for the last 10-20 years (eg – college inflation, healthcare inflation, housing inflation…”


          I wouldn’t consider this inflation…

          More like in your face racketeering…

          Government sanctioned Mafia in the mainstream…

  30. Hard to imagine credit getting tight even with higher interest rates. The Fed can supply liquidity regardless. Higher borrowing costs are offset by opportunity. Low rates benefit riskier investments, while sound companies have all the money they need. So all higher rates would do is kill the spec, or the SPAC. If you want to follow this in the big picture watch natural gas. Fed policy destroyed the fair market in energy, through fracking. NG prices could soar if supplies remain constant and demand picks up. while new manufacturing jobs are created, but it won’t happen. America hasn’t the labor force and cannot afford to pay them a living wage even with UBI. Subsidize workers nobody shows up, cut the worker benefits wages rise and watch corporate earnings tank. Inflation at the primary level high. Inflation in finished products, low, who takes the beating?

  31. Rcohn says:

    Stopping QE contains some obvious costs
    1.Who is going to finance the deficit , if there is no QE.Without the FED, government spending must decrease since no rational investor will invest in longer term debt at anywhere near the current negative real interest rate structure.
    2. No QE raises all rates beyond short term rates . Higher longer term rates will tube the real estate market and will tube the stock market
    3. Lower real estate and stock prices will have a massive negative wealth effect , given how much many assets have increased lately. I believe that you have cited stock indexes of those companies without any earnings . Such companies along with their very high p/e cousins have led the market higher.

    • Bobber says:

      The massive rise in asset prices didn’t create a wealth effect on the way up (for at least 10 years), so why would a drop in asset prices have impact on the way down? Note, the recent economic spurt and inflation is mainly due to helicopter money, not wealth effect. The Fed uses the concept of wealth effect as an excuse to keep QE going.

      The Fed has been so afraid to let stock prices fall, but such drop would have only a minor effect on the economy, and clearly a negative effect in the long term. They’ve destroyed society pursuing a false premise. All QE does is unfairly reallocate wealth to certain segments of society, mainly to those most undeserving and corrupt.

      Makes me wonder what the Fed’s true motivations are, especially when you hear stories of Fed governors trading stocks on inside information. They refuse to taper in the face of massive wealth concentration.

      • Rcohn says:

        It certainty did , but this wealth effect was concentrated among the top % of the population

  32. DawnsEarlyLight says:

    My beloved Wisconsin brats now fit a regular size bun. Oh, the humility!

  33. Swamp Creature says:

    I’m getting a headache reading all these comments on these posts. There are so many and so much information that is impossible to absorb all of it. Why not simplify everything into 3 or 4 bullet points and be done with it?


    1. The Federal reserve is incompetent and run by a bunch of morons

    2. The executive branch is just as bad and has been for the last 3 decades

    3. Congress is useless

    4. Interest rates have been kept too low for too long and have created massive amounts of speculation and malinvestment which will have to be unwound.

    5. Prudent investors have a binary choice. Either jump in the casino and risk losing all of your money in the next crash, or ride it out with safe investments that get clobbered by inflation.

    • COWG says:

      6. Real estate appraisers have single handedly kept the real estate market from being 10 times worse than what it actually is…

      Fixed it for you…

      I, on the other hand, am utterly astounded at the diversity of thought and experience that the commenters here freely and honestly put forth, even in a not so great light for themselves…

      I enjoy them all, even yours…

      Might need to increase that fiber, SC…

    • DougP says:

      Swamp, you said simplify everything into 3 or 4 bullet points, and then you gave 5. It is easy to get caught up in all of this I agree!

      • BuySome says:

        Point 1>>>FUBAR rules the alphabet pool.
        Point 2>>>A Corrupt Idiocy sets point 1.
        Point 3>>>A Foolish Public is allowing point 2.
        or just FP x CI = FUBAR rate of acceleration.

    • historicus says:


      Right on.
      The Fed has convoluted everything they touch…and now it is crunch time…
      Punishing the workers and savers of a country is a CRIME, IMO.

  34. historicus says:

    Beware the “rate of change” charts…
    They hide the cumulative and compounding that is inflation.
    A flat 2.5% rate of inflation, the upper end of the Fed’s illegal goal of inflation, would be a horizontal line…boring, suggesting nothing…
    but the effect would be a loss of dollar purchasing power of 28% in ten years.
    Rarely will you see a chart displaying the aggregation, accumulation, and the compounding that is the poison of inflation.

    • Wolf Richter says:


      Look above in the comments (ca. 40 comments above): I posted a chart yesterday with straight index values, not rate of change (percentages), of the same data of stages 1-4 of intermediate demand.

      • historicus says:

        My comments were not directed at you..
        I should have made that more clear…

        I point to the game others play…

        • historicus says:

          Case in point..
          Todays WSJ Sept 13
          Article talks about how inflation has averaged “only” 1.8% over the past 25 years…
          Sounds benign
          but in fact it is a 56% drop in the value of the dollar with compounding

  35. lisa2020 says:

    thanks Wolf, I had reviewed the PPI News Release summary directly on the bis.gov, wasn’t sure if I was interpreting table B correctly. Unbelievably white hot!. With supply issues due to chips, and shipping containers, at port congestion, I look at a possible scenario of a “forced embargo” affecting supply chains down to and including food.

    • llisa2020 says:

      From Britannica encyclopedia online:”In other contexts, critics of embargoes have challenged them on ethical grounds, arguing that they often impose greater costs on the general population in the targeted country than on its political or military leadership.” A real effective embargo does not have to be nationally declared. A strategic application of stealthy maneuvers of Angary is quite effective historically.

  36. Bobber says:

    Isn’t it peculiar how the Federal Reserve can put up with inflation, long-time saver repression, gradual migration to lower paying jobs, decline of mobility and opportunity, ever-increasing debts, etc….. but the one thing they cannot accept is a lower price on assets. Why?

    • Yort says:

      The Fed and govt can not stop inflating the system into oblivion because we have all created a house of cards economy globally, with the stock market as one of the bottom levels of our house of cards.

      For example, SBL (securitized backed loans) allow even the common person to borrow as much as 60% of their stock portfolio to gamble on something else that might inflate artificially due to the govt and Fed, and then in theory take out another SBL to keep the “wealth affect” going. It becomes a literal continuous Ponzi scheme as one can keep placing bets on top of previous bets that have been inflated by the fed and govt ignorance. Then you have huge margin/leverage by hedge funds, derivatives, foreign purchases tied to god knows what as collateral, debt out of the wazoo on every level than can not handle even one half of one percent of interest rate hike…so the Fed and govt are trapped into keeping the markets on monetary and fiscal steroids in order to keep our house of cards from toppling.

      The irony is that forced stability breeds instability, and money printing simply pulls future consumption and GDP forward, which even more ironically pulls forward the increased levels of carbon in the atmosphere…in which our response will be printing more money, which creates a perpetual system of planetary self destruction in which a handful of white papers of individuals and groups from some of our greatest minds think we will be lucky to survive another 100-200 years at current rate of existence, barring forced changes what lead to a different way of life. And yet as the tribes argue on what to do about the damaging weather changes, nobody seems to care that it doesn’t matter who or what or even when it all started…it is like not pulling a rotten tooth because your not sure if it was sugar from soda or bad genetics that caused the decay…HA

      Humans became optimized by evolution to survive in small tribes of 100 individuals or less, and we tend to work best together with a common forced goal that is tied to survival yet we compete for survival on in much larger groups. The complexity and size of our global system today is more than we can manage…and as with all natural systems of the universe, it will balance at some point, no matter what our grouping of atoms emotionally desire (or how much “wealth” we artificially print). In most basic form we are a specific arraignment of sub-atomic particles, and those sub-atomic particles are forced into a system of universal constraints and behaviors that we can only control for short bursts of “human scale” time.

      If you think hard about it, time is what we all attempt to control if we filter out all the other miscellaneous variables, and attempted control of time is the main ingredient of the system in which we exist currently. And then along comes Covid (perhaps even created ironically by our attempt to extend lifespan and control time, by curing Sars/Mers), which forced us to all think deeply about our relationship with time, and funny enough the forced changes has most likely increased our longevity as a species in this universe as we are more prepared for a much worse future virus than we had been two short years ago.

      So in a weird way (and back to the point because I tend to wander often), the Fed and govt endless ignorance will likely lead to forced changes…which will most likely lead to a better life for future humans, yet us current humans are most likely not going to always enjoy the next few decades of ever changing unpredictable changes…yet such is life, right???

    • historicus says:

      What of the argument …
      “We cant raise interest rates because it would be too expensive to service the debt.”

      Well..gee whiz…..THAT’s WHY YOU DONT GO INTO MASSIVE DEBT.

      This train of thought is right there with “I am in big debt because of the student loans I took out.”
      Well, you knew what you were doing and now you hope for forgiveness…

  37. Swamp Creature says:

    One thing that does not show up in Wolf’s charts is the amount of retail business that goes on that is not reported. Its known as “Southern Income” Example: since the pandemic many hair salons are losing customers to work at home hairdressers. Mrs Swamp goes to one on a weekly basis. Pays cash. I wonder how much of the income is reported to the government. You guessed it Zero! This is repeated with a lot of other businesses like landscapers and handy men. If this income was reported GDP would be much higher than it is.

  38. ru82 says:

    I ordered an a living room ottoman today from Nebraska Furniture mart. They said it will be delivered in April 2022.

    I ordered a bathroom vanity from Lowes a month ago. When I ordered it, Lowes said it would be delivered in 1 to 4 days.

    Then each week they kept moving the delivery date out another week. They just went ahead and sent me an email that the order has been canceled. LOL

  39. COWG says:

    Trying to make sure I’m not a dumba$$ here…

    Soooo… the data from the the pce, pmi, cpi, aarp and eieio says inflation is hot… I get that too much money chasing too few goods creates inflation (simplified)…

    I also get that you.have raw material, supplier to finished good passing along input cost that’s higher…

    So what happens when the peons, the newly stimulated wealthy, and the plain ole folks who cannot afford or refuse to pay the inflated price don’t buy?

    Now the end of the chain has stuff that won’t be sold… does said business then discount said goods to get rid of it and generate some cash even if it was sold below cost… would this not then create some sort of deflationary cycle that would traverse the supply chain backwards?

    I realize this is not an overnight event and would not necessarily affect everything, but is it outside the realm of probability that it could occur?

    Going a step further, I wouldn’t think its too far fetched to think the Fed created inflation and then turned right around and created a recession because of it by shutting off the money that created the inflation to start with?

    The whole world might be on sale soon…

    • Nicko2 says:

      Dollar index is rising again. Cash is king! Load up on cash, buy ‘stuff’’ when it goes on sale and sellers are desperate.

  40. Swamp Creature says:

    In addition to the routine shortages of essential items I’ve noticed inflation hitting some of the products (food & non-food) I regularly buy at my local supermarket. Up till now I didn’t see much inflation except in imported items. Now its spreading to many other items.


    My favorite Carr pepper crackers now $4.69 for a 4ox box. up from $4.29

    Yellow peppers $1.88 ea. vs 3 for $5.

    Deli Ham $12.99/lb vs $11.99/lb

    I believe this is just the beginning. Inflation is already at double digits and going higher.

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