WHOOSH, Dollar’s Purchasing Power Goes to Heck as Services Inflation Takes Off, Food Spikes, Energy Explodes, But Used Cars Finally Stall

The Fed is still pumping fuel on the fire.

By Wolf Richter for WOLF STREET.

The Consumer Price Index today – a measure of how fast the dollar and everything denominated in dollars, including labor, lost its purchasing power – is a horror show, the likes of which the majority of Americans have never experienced in their lives. Reality on the ground is even worse for many people because CPI is slow to pick up the red-hot housing inflation as we’ll see in a moment, and because CPI structurally is skewed to represent the inflation felt by higher-income households, while lower income households, as Fed governor Lael Brainard pointed out last week, face higher inflation and feel it much more.

The overall Consumer Price Index (CPI-U) spiked by 1.2% in March from February, and by 8.5% from a year ago, the worst since 1981, according to data released by the Bureau of Labor Statistics today.

But in 1981, the Fed was effectively cracking down on inflation with double-digit policy interest rates, and inflation was on the way down.

Now inflation is spiking, and the Fed is still repressing short-term interest rates to near 0%, and it still holds $8.9 trillion in assets on its balance sheet as a result of years of money printing, including $4.8 trillion that it printed over the past two years to repress long-term interest rates and to produce the biggest wealth disparity ever. And now we’re surprised by this spike in inflation?

There is no period in history that compares to this period, not even the 1970s because the Fed wasn’t printing money in the 1970s.

WHOOSH goes the Dollar’s Purchasing Power.

Consumer price inflation is not a sign of anything positive, but a sign of the loss of the purchasing power of the consumer’s dollar, including the purchasing power of labor. And it’s cumulative, month after month, year after year. In March, the purchasing power of $100 in January 2000 dropped to a new record low of $58.80, which explains why the mood of Americans has curdled:

Inflation in services is now spiking.

The CPI for services – which includes housing costs – jumped by 0.7% in March from February, the third jump in a row of this magnitude, and by 5.1% compared to March last year, the worst services inflation since 1991. Given how slow the CPI is in picking up the surging housing costs, this portion of the CPI will continue to get worse, even as prices of gasoline and used cars might come down some.

Inflation in housing costs.

The largest component in CPI is “shelter,” a basket of services that is designed to represent housing costs and accounts for 32.7% of total CPI. The largest components in this basket are “Rent of primary residence,” accounting for 7.3% of total CPI, and “Owner’s equivalent rent of residence,” accounting for 24.0% of total CPI.

“Rent of primary residence” jumped by 4.4% in March (red in the chart below). This tracks what tenants reported as their actual rent payments, including in rent-controlled apartments.

“Owner’s equivalent rent of residences” rose 4.5% (green line). This tracks the costs of homeownership as a service, based on what homeowners reported that their home would rent for.

Because both of these rent measures are lagging, they will continue to spike as they catch up, even if over the next 12 months housing inflation actually were to cool down a little. So these housing components that weigh much more heavily than used cars or gasoline are guaranteed to provide upward pressure on CPI well into 2023 (my discussion of this phenomenon).

Note that both measures are still well below the overall CPI and therefor are still holding down CPI, but less than before, and as they rise, they will hold down CPI even less.

In terms of “asking rents” across the US, which is a measure of what landlords are asking for their apartments and houses that they have listed for rent, the inflation picture is red hot. The Zillow Rent Index has shot up 16.8% year-over-year, despite the slight dip in March. Compare to it the “rent of primary residence” (purple) and the “owner’s equivalent rent” (green), which have a lot of catching up to do, and they will catch up partially, but with a lag:

The actual costs of purchasing a house spiked by 19.2% year-over-year, according to the Case-Shiller Home Price Index, with totally crazy raging mania in some markets, depicted in The Most Splendid Housing Bubbles in America.

The CPI however hasn’t picked up that raging mania in housing costs as you can see in this chart of the National Case-Shiller index (purple) and the CPI for “owner’s equivalent or rent,” the stand-in for homeownership costs (red). Both indices are set to 100 for January 2000. The chart shows the disconnect of housing costs in CPI and the reality homebuyers are facing:

Inflation in durable goods v. nondurable goods.

The durable goods CPI – includes new and used vehicles, consumer electronics, furniture, appliances etc. – spiked by 17.4% year-over-year, the third-worst ever behind January and February. On a month-to-month basis, it backed off for the first time in months (red in the chart below).

The down-tick was due to CPI used vehicles, which fell for the second month in a row (-3.8% in March from February), which whittled down the year-over-year spike to a still crazy 35.3%. That used vehicles hit price resistance, on slowing volume and plenty of supply, became clear months ago (my discussion on this ultimately ridiculous historic spike and its decline).

The CPI for new vehicles ticked up just a tad in March from February, and year-over-year was up 12.5%, the second worst ever, behind the 12.7% spike in 1975.

The CPI for nondurable goods – which is dominated by food, energy, and household supplies – spiked by 13.1%, the worst since 1980 (purple line):

“Food at home” inflation spiked by 1.0% for the month and by 8.5% year-over-year. Major categories, and their year-over-year spikes in CPI inflation rates:

  • Cereals and cereal products: 10.1%
  • Beef and veal: 16.0%
  • Pork: 15.3% as folks switched to pork from beef.
  • Poultry: 13.2% as folks switched to poultry from pork.
  • Fish and seafood: 10.9%
  • Eggs: 11.2%
  • Fresh fruits: 10.1%
  • Fresh vegetables: 5.9%
  • Dairy and related products: 7.0%
  • Coffee: 11.2%
  • Fats and oils: 14.9%
  • Baby food: 10.8%

“Food away from home” inflation jumped by 6.9% year-over-year, the most since 1982. This includes everything from high-end restaurants to food at elementary schools.

Energy costs exploded by 11.0% for the month and by 32.0% year-over-year. They weigh 7.6% of overall CPI. Among them:

  • Gasoline: +18.3% for the month and +48.0% year-over-year.
  • Utility natural gas to the home: +0.6% for the month and +21.6% year-over-year.
  • Electricity service: +2.2% for the month, +11.1% year-over-year.

Core CPI: Inflation if you don’t buy food and energy.

The “core” CPI-U excludes the volatile commodities-dependent food and energy components in order to measure inflation in the broader economy. Thanks to the month-to-month decline in the CPI for durable goods, and the slowness with which housing inflation is getting picked up, the core CPI rose “only” 0.3% for the month and by 6.5% year-over-year, the worst spike since 1982.

Dear crypto fans, we love you, but…

Have fun with cryptos and gambling with cryptos, make big money, lose big money. But don’t claim that they’re a hedge against inflation or against the collapse of the dollar or whatever, because Bitcoin has plunged by 33% against the dollar year-over-year, and by 41% against the dollar from the peak in November. Plus, on top of it, Bitcoin lost another 8.5% in purchasing power due to inflation. So do the math, in terms of this being a hedge against anything.

Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.




  266 comments for “WHOOSH, Dollar’s Purchasing Power Goes to Heck as Services Inflation Takes Off, Food Spikes, Energy Explodes, But Used Cars Finally Stall

  1. Sporkfed says:

    Just like that, a generation of wealth destroyed.

    • 2banana says:

      Only for the middle class.

      Those in the front of the easy money line, to include uber insider trading politicians, have never been more wealthy.

    • Harry Houndstooth says:

      What is an American Millennial human to do? The real wealth destruction lies ahead of us.

      Visit Wolfstreet daily.
      Sell the overvalued assets now. Stocks, bonds, real estate, art, cars, trucks, collectibles, It is a privilege to have the opportunity to invest at the top of a bubble of centennial proportions. You are probably thinking, “go into cash?, cash is trash, especially with 8.5% inflation”. In a bear market, he who loses the least, wins.

      Buy some STRY and SQQQ on rallies. Expect BIG RALLIES, according to bear market history. (we just had our first dead cat bounce, IMHO) Get out with a profit and buy the next rally. Do not allow a double to turn into a loss. Your goal is to get to the bottom with a big pile of cash. These are trading vehicles, not investments.

      Millennials have particularly had their future stolen. As Charlie Munger has lamented, there is no way for them to prosper with conventional and customary investments. Returns are so low, thanks to the Fed (as Wolf has so elegantly displayed), they have had their future stolen.

      If we try to inflate our way into the valuations, especially of a large number of Zombie companies, the Millennials should be outraged.

      • GSH says:

        Wait….Aren’t the millennials the biggest voting block for several years now. Unless they want to plead ignorance, it seems they stole their own future.

        • phoenix says:

          wow, it’s crazy how this all happened in one or two election cycles when millennials were the biggest voting block. I could have sworn this was a decades long process. It must have been all of those millennial politicians. Nothing to do with ancient geezers who barely know how the internet works desperately clinging to every lever of power in this shithole country. Nope, not that

        • Abomb says:

          Doesn’t matter who you vote for when both party’s angle to keep the good times rolling while they’re in office without regard to long term health of the nation.

          Plus we all know this problem has been building for much much longer.

        • El Katz says:

          It’s nothing new….. in the 1960’s the joke in Chicago was:

          “Vote early! Vote often! Vote Democrat!”

          (My neighbor was a precinct captain…..)

        • nodecentrepublicansleft says:

          Regardless of how you want to slice and dice the “electorate”, the issue will always be quite simple: Until the American Public gets off its lazy ass and starts paying attention to politics and STOPS voting against their own economic interests, we will be screwed.”

          George Carlin pointed this: “The Public Sucks”. WE are responsible for this mess. Instead of complaining, we need to organize and support changing the system.

          Several folks on this site are always saying they hope it all crashes and burns. We tried that. It was called “The Great Depression” and it was terrible.

          So don’t blame anybody but the man in the mirror (and all his friends)!

        • Winston says:

          “Unless they want to plead ignorance, it seems they stole their own future.”

          So, all millennials get to vote on Fed policy?

      • Anthony A. says:

        As retirees with no pension and SS as the main income source, we have cut back our food bill by eating low priced apples instead of a “normal” meal (primarily lunch). Breakfast is still affordable as eggs are reasonably priced (still). Bacon is out of the question though.

        Dinner is another story that we haven’t solved yet. The lines at the local food bank are so long that when we get there, all that’s left are cans of beans and sacks of rice. If we could score some sausage, we could make Cajun red beans and rice for dinners. (One can only dream..)

        On another note, Walmart’s “great value” 4 pack of 6 ounce containers of yogurt went from $1.24 to $1.82 overnight. So much for buying yogurt. Maybe I’ll try to make my own.

        • jr says:

          How does the old saying go? “If we had some bacon we could have bacon and eggs, if we had some eggs”

        • Janna says:

          Anthony,

          You are right, food prices are definitely getting out of hand. We are eating a lot of salads and we started fishing again. I’m looking forward to our Farmers Markets opening in May. In our state, retirees can actually get vouchers for the Farmer’s Market.

        • Old School says:

          You can still get a pork roast (pork butt) on sale in NC for 99¢ per pound. Very flexible protein source and you don’t have the high fat content of sausage or bacon. Dried beans always are better value than the canned and not much work to hydrate and cook.

          My parents grew up poor and taught me how to stretch a dollar regarding food for which I am grateful. They always had a large garden until my dad turned 91. I think the garden was one reason they are both going into their ninties.

        • Shawn says:

          This was an amazing and eye opening post Anthony, thank you so much for sharing.

        • Janna says:

          Old School,
          We are starting some plants this weekend. We are a little behind. We are in the south also and one year, we had cucumbers all the way to Nov. We live in a rental though and are pushing the limit as to what is actually allowed. I start most of our plants from seeds because it’s cheaper. Although, it seems like the things we dislike the most, grow the best! We have a fig that we can’t get rid of. We are not fig fans:-) Every year we cut it down to the stump and every year to still gets about 10 ft tall! Although, our neighborhood also has about 10 pecan trees and there is enough for the whole neighborhood which is nice.

        • RT says:

          Perhaps we will come to the point where beans and rice are all that we have to survive. Just like the past generations, and many people in the world throughout most of human history, we have to learn to survive on the limited supply of food that we have.

          That’s why it’s important to have a local community of farmers and producers that we can rely on. Need to start finding the local food producers and support them in their production.

      • Augustus Frost says:

        When the asset mania ends and the long term bear market arrives with a vengeance, there will be no escape from downward economic mobility for the vast majority of the population.

        • sunny129 says:

          Augustus Frost

          BEAR is already but every one in MSM Financial and WaLL ST are in denial mode!

          Remember this morning when inflation number (8.5%) the indexes shot up! Wonder Why/ B/c Pundits at Wall St proclaimed that b/c of 8.5%, the inflation is ‘ebbing’ and happy days are ahead! This will repeat this on every data, that comes out and they will lip stick on pig, pallatable, for BTFD crowd!

          More lemmings are heading toward the cliff! Tomorrow is PMI index! What will they spin!?

      • Wisdom Seeker says:

        Millions of people want to see houses and retirement assets “go on sale”.

        Intelligent people do not want shelter to be expensive any more than food, clothing or transportation.

        Retirement is inevitably expensive because otherwise no one would be working. ;)

      • Educated but Poor Millennial says:

        “ In a bear market, he who loses the least, wins.”
        This reminds me the big short when no one was thinking about it.

      • HotTub Marmalade says:

        You’re right Harry… We’re in the final stages of the Cycle of Prosperity.

        “Hard times create strong men;
        Strong men create good times;
        Good times create weak men;
        And weak men create hard times.

        Which stage of the cycle are we in now? I’d say we’re starting the last stage where weak men create hard times.

        Great Depression II seems to be in this country’s future.

        If I were of breeding age (which I’m not, thank the heavens), and if I knew what I know now about the state of the world, I’d have to really think twice about bringing children into this world. Because the futures of this country’s youngsters really looks grim.

        • Here it comes says:

          Young kids and those yet to be born will likely be of the “Strong men create good times” ilk. They will be coming of age (20’s or so) when this bear market ends. They will have grown up in times that are difficult and will have a very different perspective on the world.

          The people who are going to be crushed are those between 15-45 today (particularly the older ages). They will see their livelihoods and previous lifestyles and dreams become unattainable. They/we will be the ones who experience and are the “adults” who become the “Hard times create sting men”.

        • Winston says:

          “I’d have to really think twice about bringing children into this world.”

          See:

          ‘Children of Men’ is really happening
          Ed West, Mar 10 2022

          Very bad demographic issues worldwide.

        • RT says:

          Where there is life, there is hope. Children, our next generation, when raised up correctly, is the hope of our future. The solution to all these problems is not to shut down and not have kids. The solution should be to have more kids, so we can build a strong local community that can produce base necessities, especially food.
          During great calamities throughout history, people survived, as long as there’s food and water and a place of shelter, we can survive. And we need children to grow and become the next generation, and as they lived through these hard times, they truly will become the generation that can rebuild and carry on the life of this nation.
          Sadly, in today’s post modern culture, most people are so self-centered, and they lost the aspect of the survival of their own ethnic group/nation/culture. They did not see the bigger picture. The will to survive and to see one’s own nation/ethnicity continue is one of the drives of humans throughout history.

        • Lisa_Hooker says:

          Ah, yes. My strength is as the strength of ten because my heart is pure.

      • andy says:

        This takes some practice. Too late to practice now.

    • RH says:

      They may be feeling confident because the CCP just ordered mutual funds and brokerages in China to “prevent panicked selling,” which is as if your pilot in your transatlantic airplane comes back to your passenger seat and demands: “please prevent this plane from crashing.” LOL

      In other words, global investors are out of alternatives, since the banksters “Fed” is issuing dollars while the government is reportedly paying higher interest rates on treasuries than the CCP is on its more risky bonds. That means the CCP’s financial future is kaput. LOL

      • RH says:

        Correction: … the banksters’ “Fed” is issuing more and more dollars…

        That money printing will create more worldwide inflation.

    • andy says:

      Wealth destroyed? Elon Musk is up $200 Billion in 2 years. They printed $10 Trillion in under 3 years. Just not for you.

    • General Strike says:

      Not for the ruling class.

  2. 2banana says:

    Either the FED:

    1. Are bumbling idiots who don’t even know HS economics

    2. Know exactly what they are doing

    It is #2. And the more chilling question is why they are doing it.

    “Now inflation is spiking, and the Fed is still repressing short-term interest rates to near 0%, and it still holds $8.9 trillion in assets on its balance sheet as a result of years of money printing, including $4.8 trillion that it printed over the past two years to repress long-term interest rates and to produce the biggest wealth disparity ever. And now we’re surprised by this spike in inflation?”

    • NotBuying says:

      I switched from grocery shopping at Publix to shopping as much as possible at Aldi. Even so, the latest price of milk at Aldi has gone up 18% from the last price. That is crazy. It is still cheaper than anywhere else as far as I have seen.

      • Dorian says:

        I’ve done the same; I am not paying more for the same: inflate my salary if they want me to keep my previous buying behavior.

        The way I see it now is that people will buy less, consumer spending will slow down, companies will start crying foul and lay off people, and recession will be in full swing. Something has to give.

        • TimTim says:

          … and chipotle will be in the news trialling automated chip machines to reduce headcount.

          Lot less people visible behind the counters in McDonald’s in the past few years, it seems.

        • SoCalBeachDude says:

          Yep, the economy in the US will simply slow down considerably and that will cure any so-called ‘inflation’ in any prices.

        • BlueHenGal says:

          TimTim, we’ve seen new fast food buildings designed for drive-up and outside walk-up only – no dining room or public restrooms to keep clean. I wouldn’t be surprised to see a lot of fast food establishments closing the dining room indefinitely. They can hardly find enough staff to operate as it is. Our Dunkin-D can’t even maintain standard operating hours.

        • KWHPete says:

          SoCalBeachDude:

          Tell us about that oil prediction you made the other day…………

          Now back over US$100 as I said it would as China lockdown news comes out.

      • John H. says:

        We bought eggs at Aldi last fall for 1.09, but paid 2.39 two weeks ago. Two days ago, no eggs there.

        Not sure if there are loss-leader motives at Aldi, or perhaps bird flu of some sort, so maybe just anecdotal. But damn, food shortage fears are sure being stoked.

        • CrazyDoc says:

          Despite food inflation I have been able to cut down costs but buying less, a lot less, switching brands and relying on coupons (heavily). After trashing so much junk mail over the years the neighborhood now has a coupon club where we try to collect and share coupons for B1G1, B150% off etc. Managed to keep food costs at or below previous years.

        • GSH says:

          Re no eggs, there is a bird flu epidemic in the US. 22 million chickens died or had to be destroyed.

        • TimTim says:

          CrazyDoc.

          What a good community spirited idea.

          Good luck to you guys!

        • El Katz says:

          No swapping here as I can’t remember the last time I received a paper coupon for anything… mostly they are “digital” and available only through the chain website or app.

          The food store apps are the best way to save money. Yes, it’s annoying to have to go to their website and telegraph your purchase intentions. However, you’ll find “digital coupons” hidden in there that aren’t evident in print anywhere.

          Another hint for the geezers: look for Senior Days. Safeway and Fry’s (Kroger) offer 10% off your food (no booze) on the first Wednesday of every month. That also coincides with the changing of the sale flyer (which makes it tough to do the website coupons at the same time, but I do prevail). To give you an example of how well that works, I saved 42% at one store and 33% at another store (it prints out on the bottom of the receipt). Another small chain will occasionally offer $10 off your purchase of $75 if you are on their app. On rare occasions, I’ve “saved” more than I spent – per the store’s calculations.

          To add another element: Fry’s Foods (aka Kroger) has a tie in with Shell and you earn “fuel points” by doing your normal shopping. I normally receive $.20 U.S. off per gallon by using the loyalty card at Shell…. which is my preferred fuel brand anyhoo. It’s a drop in the bucket when fuel is $5 a gallon but it still turns into $4 on a 20 gallon fill up.

        • elysianfield says:

          Two chickens were talking. One chicken was bragging that she lays one dozen eggs a day…all mediums, and that the farmer gets $1.00 per dozen!

          The other chicken snorts and says…I lay a dozen eggs a day..extra large, and the farmer gets $1.05 per dozen! It is much more work, but the farmer benefits.

          The first chicken ponders this statement and then says…”Ehh, why bust your ass for a nickel?”

          Gilbert Gotfried died today….

        • Flea says:

          People in Omaha ne are starting to raise chickens in back yard ,so times they are changing

      • Marcus Aurelius says:

        If you are an adult, Milk is harmful and should never be drunk.

        We are the only species that drinks the milk of another species, and does it in adult-hood.

        Not a good idea.

        • COWG says:

          “ Not a good idea”

          Neither was chocolate chip cookies and vodka…

          I went back to milk….

        • Ryan says:

          Different groups of people have different capacities to drink (digest) milk in adulthood. The Dutch are lactose tolerant. Being Dutch and from a family of dairy farmers, I buy and drink milk regularly. On the other hand, my Japanese wife never drinks milk.

        • Wisdom Seeker says:

          Evidence?

        • DarkMatter says:

          Read a thread where a doc wrote exactly what you said. A common layperson replied: it’s because milk isn’t available to animals in the wild beyond their baby years. If you continue to give them milk from any species, they will drink it all day long. If they get used to meat after not having milk, they’ll unlikely go back to milk. The doc never replies.

          Nutritional typing and epigenetics are two important subject to research.

        • KWHPete says:

          And you aren’t qualified to give health advice either.

        • Andre says:

          Preach! Most people of color are lactose intolerant. Dairy is subsidized by Washington on many levels.

        • Wolf Richter says:

          Andre,

          I’m lily-white (though fairly dark for a lily-white guy) and milk has made me sick for at least 30 years (predigested milk, such as yogurt, is fine though). My wife who is a woman “of color” (though she’s whiter than lily white) can drink milk all day.

          My brother drinks lots of whole milk, and I don’t think it’s good for his health. But being my older brother, he is not about to listen to me :-]

          Everyone their own thing.

        • andy says:

          What about yogurt or other probiotics from same species? Still.good?

        • Lisa_Hooker says:

          I only drink my milk malted.

      • Marc D. says:

        Went shopping at Giant the other day and found reasonable prices. Paid $3.00 for a loaf of bread, $6.00 for a bottle of wine (Australian Shiraz/Cabernet) and $1.99 for a pineapple (all 3 of these were on sale). So I can still find some sale items there, at least for now.

    • joe2 says:

      They are enriching the government/corporate elite as much as possible while trying to hold it together long enough to implement the Great Reset to consolidate their thefts. It’s always about timing.

    • Marcus Aurelius says:

      “Why” are they doing it? The answer, technically, is very easy. Emotionally, though, it is horrific.

      It is either Evolutional Reptilian Monkey Emotions unleashed, OR, it is the EVIL mentioned in the Bible. An EVIL that exists only for EVIL.

      Overall, I would prefer the selfish Monkey gene theory, but as I get older, the EVIL for the sake of EVIL is winning out.

      There is no “logical”, evolutionary reason for such a level of Evil. This level has to be beyond, and above, the “physical” world. This scares me and makes me ill, but I can not refuse to contemplate it or where this discussion takes me.

      Out- of -Control Monkey Evil will just repeat all the nonsense we have created for the last 10,000 years. The cycles of human stupidity. BUT, the Biblical Evil is something we have yet to face, according to Revelations. I hope I don’t have to face it.

      Look up a 5 hour video by a “famous” singer from Australis named Altiyan Childs. It explains the EVIL for EVIL, but it will alter your life, as it did mine. You will have the eyes to SEE, and you will see it everywhere.

      • Augustus Frost says:

        The future evil of which you speak is a global socialist totalitarian superstate.

        Unlike many posts I read here, I’m confident it won’t be ruled by the psychopaths at the WEF because Western civilization is headed for future geopolitical irrelevance.

        It’s going to be under the iron fist of a Middle Eastern belief system I will leave unnamed which is predicted by two famous sources to complete global conquest.

        • Jake W says:

          the rise of a new caliphate? nah, world leadership will pass to russia and china.

        • Hal says:

          We’ll see how the iron fist of that belief system holds up when it confronts the cold hard steel and lead of my belief system.

        • Augustus Frost says:

          Jake W,

          Yes, caliphate, but as the successor to China.

          Islam is destined to conquer Europe demographically, possibly within the lifetime of a noticeable proportion reading this board. It won’t be the only region either. Russia, whose population is projected to shrink, is another one.

          I also make the assumption that it will at least somewhat industrialize just like the communist bloc has in the last 30 years which is presumably a necessity to make it a
          legitimate geopolitical threat. I expect China to provide much of the financing for this change.

          The other thing this movement needs is a leader to provide unity.

    • Abomb says:

      Why?

      Because they know we’re fucked if they can’t kick the can again.

    • TheAltonRoute says:

      They know only what they’ve been taught. I got a degree in economics from the Univ of Illinois. I don’t recall ever having heard much about reserve currencies, the gold standard, etc.

    • Flea says:

      They don’t want to pay China more. Interest

    • Maximus Minimus says:

      It’s #3. The FEDsters are bunch of low IQ hacks who used every trick in the system to make it to the top.
      That applies to the current and past FEDs as far back as Greenspan.

    • dishonest says:

      It is indeed number 2 and they know that they will never be called to task for it.

      Come what may, they have gotten away with it.

  3. Kunal says:

    Would Fed members ever face consequences for what they have done to hundreds of millions of ordinary hard working Americans? Like serving Jail time.
    This is robbery at an unprecedented level and in broad day light and to middle class working people. Just to enrich wealthy and save their asses. Ordinary People serve time for even tiny robbery.

  4. Anthony A. says:

    I’ll take door #2. It’s all a plan to wipe out that pesky middle class.

    • Volatamom says:

      Gotta agree. Very sad and worrisome for the next generation.

    • SoCalBeachDude says:

      Nope. It is merely a feeble attempt to keep the US economy from totally crashing into deep depression. The US federal government is doing massive deficit spending which is the sole reason the US government now has a $30+ trillion dollar debt of which nearly 50% has to be paid off in full each year and refinanced and US GDP is only around $22 trillion by contrast and bond buyers simply aren’t willing to keep financing that kind of utter idiocy and stupidity without adequate yields (interest rates) on US Treasuries. That is what is changing now. And there is nothing that the Federal Reserve can do to materially change that situation.

      • Nathan Dumbrowski says:

        Could they make it worse? You say there is nothing they can do do to materially change the situation? In all situations we face in IT the solution is usually down to some very simple options and the most basic of all DO NOTHING.

    • elbowwilham says:

      Most of the middle class is over-leveraged, and its been that way for a long time. It didn’t take the FED to cause that problem. There wouldn’t be 7 year car loans if no one wanted them.

      The FED is punishing middle-class savers to keep the debt-slaves going, which enriches the top .01%.

      • El Katz says:

        I don’t think anyone wants a 7 year car loan. What does happen is that people who have limited financial literacy see them as a way to get the “look at me” vehicle of their dreams at a mumphly payment they can afford. They don’t do the math on how upside down they are because…. they can afford the payment.

        It’s a sales technique called “reduction to the ridiculous” where the mark is embarrassed into signing something against his best interest because he doesn’t want to appear cheap to a sales person he’ll never see again.

        It goes something like this…. “For 50 cents a day… less than the price of a cup of coffee, you’ll deprive yourself and your family the safety and comfort of this new SuperDupermobile?”

        I watched it nearly happen to late 70 year-old woman by some high pressure solar panel salesman. I happened to stop by, was invited to listen to the pitch, and told her to throw the guy out. Which she did. He called me a few names….

    • SomethingStinks says:

      I keep hearing that but why? If I was a billionaire, I would still need someone to do my lawn, cook, clean, keep the roads functional, keep the power plants humming so my mansion can be lit up like a Christmas tree all year long, for someone to plant the crops and kill the cows so I can stuff my face, etc etc. The middle class does all that. Without that the rich schmuck will be hungry lying on a pile of currency interspersed with gold bricks.

      • Anthony A. says:

        SS, if you were a Billionaire, your “right hand man” would be tasked to get all that stuff handled back home. You would text him instructions from your beach mansion in New Zealand. He would also arrange for your private jet when you need it.

        • SomethingStinks says:

          Sure… even still, the right hand man is not going to plant crops or kill cows, or go fishing in 50 foot seas for king crab that his master demands; that’s what they have us middle class plebs for. Unless elon is making a self fishing vessel and a fully automated field that plants and harvests crops and kills the occasional cow that gets in range of the auto ranging 30 cal.

        • Anthony A. says:

          SS, come to south Texas. There are plenty of “new” people coming across the border that can do all that task oriented work. Heck, I use a crew of them at my place to do the landscape work (I’m near 80) and anything else we need done, including installing our new water heater last summer, cutting trees, etc. These new people are very hard workers and many of them are pretty skilled.

          These people will be the new middle class in America. Really skilled stuff like computer coding is sent to India, (our new tech center).

          We live near a community college and I see these new people taking classes for all kinds of service type jobs (medical field, plumbing, electrical, etc. Our local sheriff’s department has several immigrant officers on staff.

          It’s a new world beginning here in the states.

        • KWHPete says:

          Are they letting people into New Zealand now?

          Don’t know what the status on entry for non-New Zealand citizens or PR holders is.

          New Zealand is too expensive now for ordinary people and they have basically banned foreigners from buying property there.

      • Flea says:

        Mexico minimum wage 8$ a day our new reality

  5. Jay says:

    “So these housing components that weigh much more heavily than used cars or gasoline are guaranteed to provide upward pressure on CPI well into 2023.”

    And could we imagine what the real homeownership component of CPI would be if the BLS used something equivalent to the CS Housing Index that’s controlled for mortgage rates, including refi’s?

    A lot of people who took out 90% refi’s would have seen their monthly payment increase. Some, of course, would have gone down, based primarily on how much equity you took out of your home and your interest rate.

    That 4.5% would probably be 5-7%.

    I can’t wait to see your future graphs, Wolf!

    • Wisdom Seeker says:

      In jest: Loan payments don’t count as consumer prices because all the interest goes to wealthy elites, whereas with usual consumer prices the elite skim is only the 10-50% profit margin. ;)

      Seriously: Consumers shouldn’t just be asking “How much am I paying for this?” but also “Who am I paying, for this?”

      Who you choose to enrich may have a big impact on your future well-being.

  6. joe2 says:

    I think Russia is the big prize for the corporate elite. Overthrow the government, install a puppet, divvy up the land and resources, put the population in debt under the guise of “democracy”.

  7. Nemo 300 BLK says:

    I can’t wait for the next recession. Good times for all!

    • COWG says:

      Yup,

      I’m thinking Q1 2023 will be a free for all with everybody and their brother trying to get you to buy something…. Anything… please…

      • Nathan Dumbrowski says:

        And when you won’t, don’t, can’t then expect Stimmy out the yahoooo to help motivate you. All they way back to Cash for Clunkers and so many other plans to spend spend spend at the expense of the national debt. That is what I have come to expect with the government. They of course will come up with a dandy name. Russia Ukraine Inflation National Defense Expense or RUINED for short

    • Augustus Frost says:

      I’m as negative as anyone posting here but I’m certainly not looking forward to it.

      I look forward to presumably finally being able to buy somewhat solvent assets with a decent cash yield at more reasonable prices.

      Concurrently, there are going to be serious social consequences from long-term declining living standards and the political blowback that goes with it.

  8. Confused says:

    But, Wolf, the financial press on cable TV keeps saying that the Fed is getting more and more hawkish on inflation. Of course, they also say “Buy the Dip.”

    • Jay says:

      Mortgage Rates Jump to 5.25%. SWEET!!! GO, GO, GO!

      Forget buy the dip, go buy that overpriced house, people ; )

      • 8_mile_road says:

        //Mortgage Rates Jump to 5.25%. SWEET!!! GO, GO, GO!//

        Get your popcorn ready, and wait for the US housing marking collapse. As the President of China, Xi Jinping, said, “housing is for living rather than speculation”. You are free to speculate as much as you want, but you aren’t free to escape the consequences of your speculation.

        The housing collapse HAS already happened in mainland China. Look at Evergrande Group! It’s almost gone, and the PRC government refused to bail the stockholders.

    • Wolf Richter says:

      Confused,

      Yes, the Fed is getting “hawkish.” But it is way behind the curve, and whatever it will do, will be too little too late. So we’ll get a 50-basis-point hike in May, instead of having already gotten 12 hikes of 50 basis points each, over the past 10 meetings and in between meetings. And it will shed assets after the next meeting in May, but it should have never bought that $4.8 trillion since March 2020 to begin with.

      • Thomas says:

        I have yet to see any explanation telling me how raising interest rates will fight inflation.
        Raising rates will increase the cost of everything, cause loan defaults, business failures, layoffs, rising unemployment, and a recession.

        What it WON’T do is lower inflation. The Fed can raise rates and it won’t increase the supply of semiconductors, increase the availability of affordable housing, increase the supply of gasoline, stop price gouging by meat packers, unjam the global supply chains or win the global battle against the pandemic.
        All it will do is hobble us while we are trying to address those problems.
        But please. Tell me how raising interest rates will fight inflation.

        • Wolf Richter says:

          Thomas.

          “I have yet to see any explanation telling me how raising interest rates will fight inflation”

          The only reason why you haven’t yet seen “any explanation telling me how raising interest rates will fight inflation” is because you avert your eyes every time the explanation is in front of you. The explanation is DEMAND.

          I just gave you the explanation, and the Fed gave you the explanation, and everyone knows this, but you refuse to see it: Higher interest rates will reduce demand, and they will reduce asset prices, which will further reduce demand. And eventually, slowly, when demand cools off, price competition sets in, and raising prices gets more difficult because consumers and businesses are resisting price hikes and shop around, and the whole psychology changes, and inflation cools off. There are no secrets here.

          So I give up. You’ve had plenty of opportunity to see the explanation. But you refuse to see it, and it doesn’t make sense for me to waste my time rehashing this. But you cannot spread this nonsense here forever. After a while, it equates to trolling.

      • Wisdom Seeker says:

        I wonder how high the CPI has to go before the Fed stops thinking in terms of 0.25% “baby steps” (or 0.5% “double baby steps”) and goes in for a surprise 1% (or 5%!) “shock and awe” hike in order to actually shock the markets back into sanity…

        • AK says:

          I was wondering about this too, but then I realized that I am assuming that Federal Reserve actually intends to fight inflation, which (I came to believing) is a false assumption. I think they are going to raise rates in these baby steps with the goal of escaping the criticism that they are not fighting the inflation, with clear understanding that they can’t do much to slow down the inflation (at least not now).

        • Colinsky says:

          On Dec. 5, 1980, the Fed hiked the rate by 2% to 20%. Was that the highest one-day increase?

        • Old School says:

          It’s above my pay grade as they say, but I have been reading that tightening is happening really quickly. The slug of covid money is running out and government deficit is smaller than before. Chart I saw a couple of weeks ago showed GDP nose diving down toward zero.

          We might be in recession quickly with asset prices falling and inflation on certain items still high because of supply chain issues. If people don’t have the money, they cannot purchase.

      • Educated but Poor Millennial says:

        Fed deliberately doing so to pump it up and then crash the market , creating new opportunities for greedy 1%
        Nothing else is predictable for me.

      • Confused says:

        Wolf,

        I made fun of the media because the Fed plans to take 18 months (including down time) at $95 billion per month to shed the bonds it acquired in the last 12 months at $125 billion. In addition, the latest increase in inflation exceeded the 0.25% rate hike. If the Fed were serious about ending inflation, it would increase the fed funds rate by 1% at each meeting and sell bonds at the rate of $200 billion per month or more. Perhaps the Fed will send everyone a big red WIN button to ensure a soft landing.

  9. Brant Lee says:

    “The Fed wasn’t printing money in the 1970s.”

    You have to admit, it’s been a real work of art that the Fed has pulled off money printing with little inflation for so long. I mean, 30 trillion! That’s a lot of trucks backed up to mint, loading up, and disappearing into the night.

    And, as we can see, it’s not stopping here. Keep the presses rolling, there is more blood in that turnip. Money doesn’t grow on trees in D.C., It grows legs and just walks off.

    And hallelujah, It’s that time when our favorite politicians are on the billboards and TV, saying vote for me again. No problem.

    • SoCalBeachDude says:

      THAT $30 TRILLION IS US GOVERNMENT DEBT AND HAS LITTLE TO DO WITH THE FEDERAL RESERVE.

    • Depth Charge says:

      “You have to admit, it’s been a real work of art that the Fed has pulled off money printing with little inflation for so long. I mean, 30 trillion!”

      I’m not sure what world you’ve been living in, but there’s been massive inflation the entire time. It has been decades where two household incomes have been needed to afford what used to only require a single income.

      • Augustus Frost says:

        I understand your point, but the lifestyle of the typical American household includes many supposed “necessities” which either did not exist or were luxuries during the era you reference.

        (Much) bigger homes, more expensive and frequently multiple cars, eating out (very) regularly, international travel, and early retirement.

        The above doesn’t even include all the crap Americans routinely buy. Like cable TV which many have finally been dumping the last few years. This stuff adds up to a small fortune over a lifetime, yet I almost never hear anyone (especially in the media) asking how most households spend (more like waste) their money, even as they wring their hands about supposed government “austerity” in social programs. No one has to buy or a “right” to any of this consumer crap.

        Yes, a substantial minority or majority of Americans are living paycheck to paycheck and yes, I blame the government for intentionally debasing the currency. Still doesn’t answer why so many don’t manage what they have (a lot) better.

        • Abomb says:

          To your last statement it certainly doesn’t help that Uncle Sam has developed a tendency to step in and help out those making poor financial conditions….while more financially conservative folks like myself get screwed.

        • Wisdom Seeker says:

          As to “why so many don’t manage better”:

          Between genetic and cultural variations, a large proportion of the population is wired/programmed to live large and spend until there’s nothing left.

          That is amplified by advertising and media.

          Countervailing forces – family experience, education, religion – have largely been neutered. After 40 years of credit-fueled Fed bubble-booms, in which saving was punished and borrowing rewarded, who’s left to convince people to save?

        • AK says:

          Wasteful spending that you are talking about is indeed a difference between 70es and present time, but what about things that family does really need ? Like education for their children or healthcare ?

          If a family chooses to own single car (basic model), small house, and generally live at the living standard of 70s, and have 3 kids, would that be possible to achieve with just one parent working ?

        • Augustus Frost says:

          WS,

          Yes, people have been conditioned to behave as you describe.

          I attribute it to the lack of fear of financial failure, poverty, and destitution.

          The only thing I can conclude is that the majority of the population either have an immediate time preference, believe their financial irresponsibility will have no consequences, or a combination of both.

          The upcoming long-term downward economic mobility from a combination of the end of the asset mania, end of loose credit standards and cheap money, end of USD reserve currency status, and upcoming economic depression will cure them of this delusion.

          It won’t happen “overnight” or simultaneously but it’s coming.

        • douglas_stout@yahoo.com says:

          I think it’s well known that two of mankind’s less rational traits are the desire to consume today instead of deferring gratification and the enjoyment of gambling.

      • Brant Lee says:

        Okay, I should have said HYPER-Inflation or such. And yes, I’m not sure what world I’m living in these days.

    • Jake W says:

      there was tons of inflation. it was just in assets, not consumer goods and services.

      inflation is always a monetary phenomenon.

  10. There is enough softness inside the numbers to prevent the Fed from crashing the economy with rate hikes. The call is soft landing. If investors lose faith in paper, bonds and stocks, they will continue to migrate to hard assets and that would add to the number. Rent is a critical metric and when rents start rising in secular fashion more people feel pressure to buy their own home. Blue collar need housing close to their work. Govt will figure out where the subsidies need to go. I’ll bet its a long time before gasoline is below $4. I guess Brainerd has it right. A stock market dip would probably be worse for those who own none.

    • SoCalBeachDude says:

      The Federal Reserve does not set anything but a very few policy guidance interest rates and they are all a reflection of the YIELDS (INTEREST RATES) SET IN THE US TREASURY MARKETS over which the Federal Reserve has very little control as even now the Federal Reserve only owns about 20% of the $30 trillion of outstanding US Treasuries.

      • GSH says:

        Well, for not having any control the Fed has done a fine job of keeping the short term rates at zero and the long-term rates as low as 0.6% for quite some time.

    • Wolf Richter says:

      Ambrose Bierce,

      You’re dreaming. The only two things that were “soft” were used vehicle prices, which FELL quite a bit, and new vehicle prices which ticked up just a tad. Every other major component was RED HOT.

      RTGDFA

      • There is another FRN auction (2yr) in a couple weeks. Seeking Alpha says that if CPI prints too hot that the Fed will be forced to hit the brakes hard, and that would send the economy into a dive, which might be the last rate hike for a while. Not a good portend but the CPI print was well taken. A lukewarm rate hike cycle would extend and without panic buying, this auction seems doable. We’ll see.

        • Wolf Richter says:

          I’m surprised you don’t understand what this inflation means. You’re old enough to know. You should know. But I think that maybe your worries about your asset prices keep tripping up your thinking process about inflation.

          At the very minimum, the Fed has to stop pumping gasoline on the fire. And the Fed understands this, even the doves, even Brainard today. And that means much higher interest rates and QT. That would be just to get back to “neutral.”

          If the Fed keeps pumping gasoline on the fire, like it is today with its ongoing interest rate repression, we’re going to have 30% inflation 2 years from now. And possibly a revolt in the streets. Everyone at the Fed understands this.

        • Guess you’re right. I see the money flows power right through the selling. I am a conservative investor. I have a bunch of TIP bonds and hate to see the Fed stepping on my toes.

        • Tom Bond says:

          Wolf Richter: “Everyone at the Fed understands this.”

          What if everyone there not only understands it but wants it too? Are you making the mistake to think that they care about you?

        • dishonest says:

          WOLF: “And possibly a revolt in the streets”

          Never. This is America, not France.
          Try that here and the police will open fire until the barrels of their guns melt.

        • Wolf Richter says:

          dishonest,

          Yes, good point. I forgot.

    • Thomas says:

      😆
      Cute.

    • jr says:

      “A stock market dip would probably be worse for those who own none.”

      That’s some wishful thinking, right there. You need to click your heels three times though, if you want it to come true.

  11. Swamp Creature says:

    Bought some topsoil the other day at Home Depot. They put a .30 surcharge on each bag of topsoil. So inflation is even hitting the price of dirt. On the good side there were a half dozen dudes there to help load my vehicle with the heavy bags. I didn’t have to lift a finger.

    • Anthony A. says:

      Swamp, what was the $0.30 surcharge per bag for?

      • Swamp Creature says:

        Anthony A.

        Inflation/Transportation tax

        • Anthony A. says:

          Wow! Over MSRP on bags of topsoil.

          I hear from neighbors that landscape contractors around here are starting to add a “fuel surcharge” on getting to your house and cutting your grass.

    • Marcus Aurelius says:

      Just about every County has a “dump” and-or recycle center.

      You can get mulch, dirt, etc for just backing up your truck.

    • goomee says:

      I was just shopping for new pillows and found that even the price of down is up.

    • Wisdom Seeker says:

      You know inflation is here when even dirt is no longer “dirt cheap”!

    • Lisa_Hooker says:

      This will not be much of a problem until there is a “service fee” on the “surcharge.”

  12. Jackson Y says:

    It seems like Wall Street is largely expecting the Federal Reserve to front load the rate increases, with +0.5% each in May, June & maybe July. That would take the FFR to 2% by summer.

    Some economists think the CPI is at or close to peaking, as oil prices have fallen back to February levels (not captured in this CPI report), and core inflation increased +0.3% M/M, the slowest rate since Sep 2021. In addition, the next 3 months will have tough M/M comps, with CPI rising 0.8-0.9% in each of April, May & June 2021.

    Wolf, when do you think inflation will peak? What do you expect the Federal Reserve to do after that?

    • Wolf Richter says:

      Jackson Y,

      Watch the services CPI. It’s a huge part of CPI. And it has been surging with no slowdown in sight. THIRD CHART ABOVE.

      Watch the housing CPIs, which are included in the services CPI. Housing is 1/3 of total CPI, it’s huge, and the housing CPIs are surging with no slowdown in sight. FOURTH CHART ABOVE.

      Then have a look at the long-term CPI chart (first chart). Year-over-year numbers jump up and down a lot because of the base effect, and so you have these ups and downs, and we’re going to get some of them. We got that in the 1970s too, big false-hope downs, followed by even huger ups. Get ready for false-hope cooling of CPI followed even hotter CPI.

      This inflation isn’t going away until well after the Fed has gotten really really serious. And I don’t mean dabbling with a 3% federal funds rate.

    • Wolf Richter says:

      Jackson Y,

      “It seems like Wall Street is largely expecting…”

      BTW, look at Wall Street again. Right now, it looks like Wall Street has gotten the memo. Stocks are down across the board.

    • Swamp Creature says:

      You know inflation is peaking in the Real Estate Market here when people can no longer afford the high prices of new and existing homes given the rise in interest rates of 30 year mortgages. 2% increase in the last year is devastating to the first time home buyer and trade up homeowner. Condos are still doing well here because they are the only housing that’s still affordable. Many units are just being put on the market by investors who renovated and converted multifamily apts to condos. They are priced so as to attract the 1st time homebuyer, not too high and not too low yet. When that market dries up we will be out of business except for foreclosures and short sales which I am not looking forward to.

  13. SoCalBeachDude says:

    MW: ‘Calamity’ may be coming…This stock-market setup looks similar to 1999, says Jeffrey Gundlach…

  14. Escierto says:

    I am not a fan of his but I appreciated Senator Manchin’s blistering attack on the Fed today. I think if there was more of this, the guy in the street would start asking questions about the cabal and why they are out to screw him. I am waiting for the day when mobs call for Jerome’s head not metaphorically but literally!

    • Depth Charge says:

      Bread and ciruses, nothing more. Every single CONgress member is on the take.

      • Depth Charge says:

        *circuses

      • Swamp Creature says:

        I was at a Tea Party rally a few years back at the US Capitol to protest Obamacare. A Congressman showed up on the Capitol steps in a suit. We didn’t even know who the SOB was. The crowd shouted for him to come down to talk to us. They yelled “We can’t spit on you from this long distance”

    • Jake W says:

      where was manchin when the dems were passing the wholly unnecessary and wasteful $2 trillion stimulus bill in march of 2021?

      he put up a big show, and the “compromise” he got was reducing eligibility for the “free” money from couples making $160k to making $150k. whoop de doo.

  15. Depth Charge says:

    And yet the FED is still just hanging out, waiting for what exactly? Has anybody checked what Jerome Powell has been up to lately? Working on his golf handicap, perhaps? Maybe he can complain that his country club fees went up and so he knows how tough it is out there for people?

    Let’s make Jerome Powell live in a homeless camp for 6 months, no cell phone, no resources financial or otherwise. After 6 months, he can return to his current life. But he’s got to do a full 6 months on the streets with no outside help. Same with Janet Yellen. Let’s send that hag to the streets, too. Make these people live their policies up and close.

    • Poor like you says:

      It seems simple to me, really. The Federal Reserve board members are bureaucrats appointed by the POTUS, and confirmed by congress. Congress and the President are corrupt. They are mostly corrupted by powerful corporate lobbies. Powerful corporations are led by the .01% of earners. Therefore, appointments to the Fed are made to service the interests of that .01% of us.

      Every dollar printed, every regulation eliminated, every international trade deal made.. it’s all in the interest of the .01%. Not only will they not be punished for this crime against us, they’ll be rewarded and retire in peace.

      • Gomp says:

        Maybe not so peaceful.

      • MarkinSF says:

        Nice concise comment. All we seem to hear on this board are the rants against the Fed or DC or some other crony institution operating at the behest of our financial overlords.
        And in most of these cases these same people worshipped the players and systems that got us here. In fact, many still do.

    • Brent says:

      =Has anybody checked what Jerome Powell has been up to lately?=

      Yes I do – on a bi-weekly basis.Even the proverbial Caveman can do it.Go to federalreserve dot gov, then click the tab “contact”.There are many options: phone #, email, Twitter, YouTube, etc.

      In case one uses their phone # 1-202-….. on the second call Fed’s On Hold Music will be tailored to one’s age,income bracket & educational level.

      When I call they always play “Call Me !” by Blondie. I guess they dont regard highly my age,income bracket & educational level 😁

      And for you Fed bashers Fed’s On Hold Music will be gloomy doomy “Flight of the Valkyries” by Richard Wagner.

    • Swamp Creature says:

      DC

      The biggest problem facing Jerome is the fact that he has to look at the homeless camps on the way to work every morning on 14th and Constitution Ave. He wants them cleaned up and removed so he doesn’t have to be reminded of how his failed policies have devastated low income people and disabled VETs. Even the Supreme Court now has homeless camps one block away. Its getting worse every day down there.

  16. TimTim says:

    How to wind up the bitcoin crowd… Tell its just today’s betamax to fiat VHS.

    Ultimately, both were doomed, bit betamax died much sooner 😂

  17. Marcus Aurelius says:

    Well, it appears my paranoia, spider senses, and basic “conspiracy nut-job” life style caused me to have perfect timing.

    I decided, this previous week-end, to buy everything (reasonable) I should need for the rest of my life.

    Like some of you, I am up there in age, on Medicare, and getting back, from Social Security, more than I put in, thank you very much, liberal millennials. Ans I still work my day job.

    So, I asked myself, what would I need for at least 10 years? Make a list and buy it NOW.

    Shoes, socks, jeans, t-shirts, a hat perhaps (?), toothbrushes, towels, floss, OTC medications, band-aids…………………anything and everything for 10 years.

    So, I just helped boost the Chinese GDP buy everything I could think of. I even had the guy who works on my car look into another set of tires (hopefully recently made) to store for my present personal car I intend to keep “till the end”. (Plus my wife’s Gaz Guzzling Suburban).

    I went to Costco and BJ’s and bought extra(s) Coffee Maker, Toaster Oven, microwave, blenders…….more of everything I normally use….sheets, knife set(s), zip-lock bags, light bulbs, a few extension cords, batteries (they say they can last up to 10 years) ……

    Anyone not panicking, and having the time, could get much of this for less at Thrift Stores, Garage Sales, etc…But I am lazy and like new stuff………….

    Yep, I got extra oil filters and Synthetic Oil (can anybody tell me how long the oil will last?).

    From the Covid “shortages”, I knew how much shampoo, toothpaste, etc. I go through. 10 Years is not that much.

    So, If prices double or triple, “temporarily”, I got this for “cheap”. If the coming shortages result in completely empty shelves of everything (which it will), etc. I have it hoarded……………. I feel nice and prepped and cozy, but a bit crowded in the closets, pantry, spare room being used, now, as my private Kroger.

    It’s fun being a nut-job.

    • Wolf Richter says:

      “It’s fun being a nut-job.”

      Yes, but it also stimulates GDP. So thank you very much! Real GDP was up by a huge 6.9% in Q4, annualized. Q1 looks less strong but still very strong. Q2, which is now, might need some help to get to 3%, and there is no better stimulus than consumers spending money on stuff they don’t need. So thank you!!!

      The bad part is that this behavior also contributes to inflation. That’s the insidious thing about inflation: if you’re trying to beat it, you’re making it worse. So NOT thank you for that :-]

    • rick m says:

      MA- Synthetic motor oil has an indefinite shelf life if sealed, and at least several years after opening if nothing gets into the container. There’s no organic component to oxidise That I know of. Mineral oil is the same. I suppose dino oil might, but there’s not so much around commercially formulated for cars. Tires have a date of manufacture code stamped on the sidewall. I’m not sure that they store all that well, especially in the heat where I live. I bought a pair of 10-ply truck radials recently from the locally owned tire shop whose owner I’ve dealt with since ’92. They’re up to $320, mounted and balanced. Reasonable, and his family benefits. It’s very wise to prepare. I would also use the new kitchen countertop appliances for several weeks to make sure they are not defective from the factory, there’s a real breakdown in QA when personnel get tight as their margins. Electronics in consumer goods usually burn-in or burn out in a few weeks. I’ve heard lots of appliance horror stories in the last year or two.

      • El Katz says:

        Most tire stores will not repair nor remount a tire that is approaching 10 years old or older. The rubber compounds turn to rocks and the traction and braking capabilities are severely compromised. You probably won’t notice it until it’s too late. Doesn’t matter if it’s mounted or not. New old stock tires 10 years or older (new, never been mounted) should also be scrapped. If they’re on a farm truck that never leaves the field, I’d risk it. Other than that… nope.

        In addition, there are often small cracks around the tire bead (where the tire meets the rim) and between the treads that indicate that the tire is dry rotting.

        I have a set of beautiful Michelin Pilot tires that are going in the trash heap tomorrow just for that reason. 75% of tread is left. They look good from far, but they’re far from good.

        • Seen it all before, Bob says:

          You could probably store all of that stuff in the wine cellar to ensure its longevity. Though it might be best to keep the wine.

          I think I understand why people are buying underground bunkers now. Same climate as the wine cellar.

    • Anthony A. says:

      Marcus, did you prepay for your funeral or cremation service?

      • Seen it all before, Bob says:

        Is there inflation on dying? I have not seen the stats or charts. Wolf?

        • Wolf Richter says:

          Heard on NPR (LOL) that funeral costs went through the roof, even for cremation, and that the new thing is something called “recompose,” where the body gets composted naturally with plant material into great compost that you can then spread under your fruit trees. Or you might be able to sell to a farmer. If I remember right, you get about a cubic yard of compost per body from this procedure. This is modeled after the methods used in agriculture where they have long been composting dead animals that cannot be used for food.

          Giving your body to science I think is still free. They make all the arrangements. Friend of mine set that up for himself, and after he passed away, his sons followed through. This has complications though, and you need to get all the details right. But it seems there are still good deals available.

  18. SoCalBeachDude says:

    The US Dollar is doing wonderfully today and is now at 100.31 on the DXY and headed much higher as interest rates soar!

    • Escierto says:

      You need to use the /sarc tag or else people will think you are serious. The USD is soaring but you have to wonder why. Is the prospect of 2% interest rates when inflation is 8% enough to make everyone buy dollars? The USD is toilet paper – it’s just cleaner than the other wretched currencies out there.

    • Augustus Frost says:

      I hope it does increase as it’s my currency of reference, but don’t be surprised if the DXY declines as interest rates increase. Interest rates do not buy anything, people do, and they buy USD only if they are bullish on it, regardless of the supposed causal factor.

  19. ace says:

    Some anecdotal evidence for you all. Both my parents (late 50’s early 60) have verbalized spending on discretionary items now to “beat the supply chains” etc, etc.

    The mindset is in full force.

    Gundlach out here trying to claim peak inflation. I dont think so.

  20. Hal says:

    “Pork: 15.3% as folks switched to pork from beef.”

    I cook at home and I have switched to more pork than beef. I can pay the high price of beef, but I don’t want to. I’m not poor, but I do not wish to be poor.

    Heck, (incoming paradox – wait for it…) I can afford to go out to eat because I don’t go out to eat.

    I’m still astonished at how packed all the restaurants are. Do any of these people ever ponder life past today? Is the world really ending and I didn’t get the memo? Should I just go out every day and drown myself in tenderloin and Bearnaise?

    • Depth Charge says:

      I have been seeing more and more comments online from young adults who say they cannot afford to eat meat anymore. This stuff is diabolical at this point. FIRE JEROME POWELL!

      • TimTim says:

        No, but many may have a justifiable beef with the Fed…

      • SoCalBeachDude says:

        For what?

      • Depth Charge says:

        “The price of any and all meat has nothing whatsoever to do with the Federal Reserve.”

        To believe this would be to believe that inflation has nothing whatsoever to do with the FED – a shocking level of ignorance.

    • John H. says:

      Hal-

      What’s the Yogi Berra Line:

      “Nobody goes to that restaurant anymore, they’re too busy”

    • Anthony A. says:

      What is really astonishing around here, is on Sunday night, ALL the restaurants are packed to the gills. Sunday is not date night or any other day that one would expect that much business in a restaurant. And these places are pretty pricey eating establishments. It just blows my mind.

      Maybe people forgot how to cook?

      • COWG says:

        Not me…

        Scored a young fryer for $2.62 ($.63 per pound)…. Beer can chicken on the grill was 2 meals… chicken and rice for four… chicken salad for two….

        Got 5 more birds in the freezer…

        • Flea says:

          Cost up rotisserie chicken 5$

        • El Katz says:

          Rotisserie chicken in AZ is up to $8…. used to be $5. However, the local Safeway had digital coupons for fresh chicken breasts at $2.37 a pound. Bought several.

          Ground beef (85%) was $3.29. We prefer bison burgers so we go to a specialty meat market to buy that. It’s cheaper there (fresh ground) than the frozen stuff sold at the fancy pants jungle-owned grocery store

          For bacon, look at the butcher counter at your grocery store. Here they’ve had apple wood smoked bacon on sale for $5.99 per lb. for as long as I can remember (Fry’s/Kroger). Life isn’t worth living without bacon.

          And beer.

    • Augustus Frost says:

      I see the same thing every time and I do not eat out that often.

      Don’t worry, they will end up on the public dole later. There is no accountability, regardless of how irresponsibly someone spent their money.

  21. GrassRanger says:

    Wolf and all, do you think the minions in the agencies that figure out the inflation rate will come up with hedonic adjustments to housing costs if those rates continue to rise. After all, they introduced hedonics in auto costs out of the great inflation of the 1970s-80s. They are going to have to sneak more inflation into the system somehow to balance the huge increases in debt that Congress is approving.

  22. SoCalBeachDude says:

    Restaurants all around the US are now finding out the hard way that people are just now willing to pay preposterously overpriced bills for their food as people stay away in droves and many will just have to lower their prices very substantially or shut their doors this year.

    • Anthony A. says:

      Not around here (Houston, Texas), they are always full, even on Sunday.

    • Wolf Richter says:

      The restaurants we go to are packed full of young-ish people spending a ton of money. Many of our favorite restaurants are hard to get into. We’re not staying away either, though prices have come up. Eating a delicious meal in good company is one of the most wonderful things to do. And folks are still willing to pay for it.

      • Swamp Creature says:

        They are not full around here in Swampland. Not by a long shot. They have been the victim of 2 years of lockdowns and semi- lockdowns to the point where a lot of people have gone to cooking at home or take-out. I can’t stand take-out for a multiple of reasons. So now that things are opening up I’m going out like we did before and paying whatever the traffic will bear. If the prices go up 15% or 20% which they have then I pay up.

        • Augustus Frost says:

          Take out is fine for casual dining. No way I’m paying what it costs at any “better” restaurant to eat it at home.

          The whole point of paying a “premium” price for eating out is the social aspect.

  23. Harry Houndstooth says:

    Well, there is also the humanitarian aspect to the Russian slaughter in Ukraine. But even putting that aside, this is a wonderful opportunity for Europe to destroy (or better yet, capture) the Russian military in Someone Else’s Backyard. The military industrial complex thrives on production and destruction while sons and husbands are slaughtered. If France had not helped us when we were in Ukraine’s position we would have never have won the battle for our freedom. We need to help Ukraine, right now, drive the Russians off their land.

    From the depths of my soul, my heart goes out the Russian soldiers who are getting slaughtered. They had less choice then the Ukrainians in Mariupol or Karkiv, who chose to stay, God Bless Them. We need the brighted and best, right now, to figure out a way to use anesthesia gases against the Russian tanks, armored vehicles and more… to capture both the equipment, and the combatants, both on Ukrainian soil and Russian.

    The way Putin has conducted this slaughter of the feeble, the elderly and the idle in Ukraine, and the young, strong, healthy Russian Combatants:

    One thing is absolutely for sure. There are going to be a lot of smoking hot girls in St. Petersburg looking for a guy.

  24. DR DOOM says:

    Congress is flush with cash and grift. They are telling the Average Joe or Jane by their silence to go get f’ed and then wag their finger as they lecture you that Ukraine is what we should be concentrating on instead self centered whining about a little inflation. And do not forget that Vlad the Mad is causing it all. The 6’oclock MSM vomit bag tonight will virtue signal by telling you they “feel your pain” then back to the latest Vlad the Mad murdering spree. The Fed will trot out another jawboning mouth piece in the coming days to tell you that they got a toolkit and are going to open up a can of whoop-ass . Yep, better back up and watch out cus’ we gonna kick some inflation ass. The electorate will watch it all, have a beer,scratch their ass and go back into their trance. That includes me. Wish it didn’t. The truth is a bitch.

  25. SoCalBeachDude says:

    California considers mandating 4-day 32 hour work week…

    • Wolf Richter says:

      California considers blocking all your bold-font comments.

      • Phoenix_Ikki says:

        Wonder if this SoCalbeachdude is from infamous Huntington beach..the way he bold-font his one liner comments along with the content of the comment itself screams HB anti-mask protester to me back in middle of 2020.

      • JohnD says:

        Wolf, please be aware that SoCalBeachDude comes to us via Michael Synder’s Economic Collapse Blog. It was there that he
        literally ruined the comments section by posting DOZENS of comments every day–most of which were nothing more than links to various headlines and news items. This went on for YEARS. For some unexplainable reason, Michael never blocked him. However, the comments section was recently deleted so SoCalBeachDude has washed up on your blog’s shore. Just a heads up on who he is and the trouble he causes.

    • Wolf Richter says:

      SoCalBeachDude,

      BTW, “California” isn’t considering any such thing. That is clickbait designed to titillate some morons.

      And “America” is “considering” the same thing (see last line), but that is not exciting to clickbait mongers like you.

      The not-yet braindead would have actually read the article and found that there is one of thousands of “proposals” in the legislature, most of which never go anywhere. Looks like just two people are “considering” it, and not “California” (LA Times):

      “The bill, AB 2932, would change the definition of a workweek from 40 hours to 32 hours for companies with more than 500 employees. A full workday would remain at eight hours, and employers would be required to provide overtime pay for employees working longer than four full days.

      “The bill was authored by Assembly Members Cristina Garcia (D-Bell Gardens) and Evan Low (D-San Jose).

      “At the federal level, a bill by Rep. Mark Takano (D-Riverside) is pushing for similar changes under the Fair Labor Standards Act.

      • Jake W says:

        yeah, i’m not interested in bills. when a bill has passed committee and is on the way to the full legislature and then the executive’s desk, then it’s worth discussing.

        until then, it’s clickbait.

  26. John H. says:

    “There is no period in history that compares to this period, not even the 1970s because the Fed wasn’t printing money in the 1970s.

    Not sure I understand this.

    I was always under the impression that the inflationary 1970’s were the culmination of the post Korean War money supply growth up through the 1970’s, and that through the 1970’s, the money supply grew in a range of 3% to 13% per year, with the Fed in “catch-up” mode.

    Finally Volker got political support to let rates rise seek a level at which businesses and investors got the message that the Fed would “do whatever it takes” rate-wise to nip the inflationary mindset.

    Was the Fed in the 1970’s actively shrinking the money supply?

    Apologies if my understanding is woefully mis-informed…

  27. George says:

    Every time I see one of these articles, I feel like I’m doing some wrong, or living in the wrong place. Every time they give a list of numbers, they are always much lower than what I see locally.

    18 eggs 3.49; to 4.49 over 25%!

    ground chuck 3.50 to 5.59 over 50%!

    lemon juice 2.29 to 3:49 50%!

    Sour Cream – 1.99 to 2.89 45%!

    Bacon – Haven’t eaten in over a year!!!

    • Escierto says:

      Life without bacon is not worth living. I think you need to mortgage the house and fry up a pound.

  28. historicus says:

    Lets assume inflation drops back to 3% for the next nine years…..deflation?

    With year one at 8% ….add 9 Xs 3%…..then do some compounding on the aggregation over the years…

    Near 40% drop in the dollar in TEN EFFING YEARS…IF inflation drops back to 3%…which is unlikely.

    Also note…. IF the inflation rate drops to 3% , that 3% calculation is NOW applied to a number that is 8% higher …ie the net 3% inflation is LARGER than it would have been a year ago…before the 8% jump

    • COWG says:

      Based on the index numbers, with todays print 5.4% COLA is already baked in with 6 months to go…

      And that number will be on top of the 6% from last year, so a slight percentage higher than just straight across the board with Dec 2021 as a base…

      Iffin’ I did the maff right….

  29. Kenny Logins says:

    Until you plot salaries in there to try make sense of things, it’s kinda irrelevant.

    And looking at 2008, things can and do go backwards.

    With consumers having to cut back so much on discretionary spending the writing is on the wall isn’t it?

    Big nasty recession and a bit of heavy backwards action?

    • Wolf Richter says:

      Kenny Logins,

      Yes, a “big nasty recession” may be what is ultimately needed to tame this inflation. The Fed, after 10 years of policy errors and dilly-dallying around in the 1970s, finally figured it out too and got the job done, and it was good for 40 years.

      Or maybe this time, a big long stock market decline that lasts for years and a long housing downturn will accomplish the same thing without causing a “big nasty recession,” but a soft landing for employment and the economy overall.

      • TonyT says:

        That’s the best case – a hard landing for some (that rely on high stock prices, high housing prices, or low interest rates, hmmm Wall St types maybe?), but a soft landing for most of the country.

        However, I don’t think it’s very likely, especially given how far the Fed is behind the inflation curve, and the logic of manias (we don’t know many people are “swimming naked” with too much leverage, etc).

        • Augustus Frost says:

          The consumer economy is too dependent upon higher income spenders to have this type of soft landing.

          I’d also rate the chances as essentially zero that interest rates will rise noticeably without noticeable changes in credit availability. At minimum, one or both will tank the housing market and cut-off funding for “tech” zombie companies which provide noticeable employment and demand/profits for other “growth” companies.

          There is also a limit to how much increased deficit spending can plug the gap to keep the economy from tanking. It’s already $2T to $3T now and recently.

          What’s next? $5T annual deficits or 20% of GDP forever?

      • Phoenix_Ikki says:

        “a big long stock market decline that lasts for years and a long housing downturn”

        One can be only dream of this…I think I pray for this daily for over a decade and that prayer hasn’t been answered yet but if you are right I definitely owe you a beer

      • Thomas says:

        Sorry but this whole argument for raising interest rates makes no sense to me at all.
        But let me see if I understand the explanation. You are saying that, we have to tame inflation because prices are too high.

        Ok, I don’t agree that the inflation numbers are because prices are too high. If prices were too high, demand would fall off, and inventories would rise and prices would drop. It’s self correcting.

        We have high inflation numbers (and I mean core inflation) because we are comparing prices that were depressed due to a recession, with prices that have nearly recovered.

        That happened faster than it has ever happened in history, but it doesn’t mean that we have runaway inflation, or systemic inflation. It just means prices recovered quickly.

        The sources of inflation that are not core inflation can not be tamed with interest rate hikes. Energy, semiconductors, rents, supply chain bottlenecks, price gouging.

        But you are saying that the way to address the problem of slightly elevated prices is to artificially raise prices on everything, and crash demand so that we have a recession, and that will drop this temporary elevation in prices.

        8 cents on a dollar over a year is not economy killing inflation. It just isn’t. Especially since a third of that is in specific markets, and doesn’t apply across the board.

        I’ve also tried to explain to you that the 1970s inflation was caused by numerous disruptions that bear no resemblance to the global economy that we have today. The kinds of disruptions that happened back then are nowhere on the horizon today.

        The distribution of wealth in the 1970s was different, too. There really were too many dollars in the economy chasing too few goods. That’s why raising interest rates worked, eventually.

        We also had a crash in the value of the currency because the world reserve currency stopped pegging its value to gold and silver, and plastic credit was inflating the amount of money in the economy at an exponential rate. Nothing like these things is happening today.

        Raising interest rates is not an economic argument. It’s a political one.

        QT, on the other hand, is a great idea. I’m disappointed the Fed hasn’t already gotten that going.

        I’m not trying to be a troll. I’m trying to persuade you. You seem like a reasonable guy who goes by the numbers.

        I don’t think rate hikes are needed if bond yields are allowed to rise more. Bonds are the classic hedge against inflation. The Fed has kept bond yields in a narrow band for a long time. We need a larger, more capitalist bond market.

        Are we afraid the stock market will collapse if it is not fed tens of billions of dollars in free money every year? Is that capitalism? Now that sounds like an inflation problem!

        And why are these players hiking prices for the rest of us if they are swimming in record profits? Are they holding us hostage?

  30. Max Power says:

    “The actual costs of purchasing a house spiked by 19.2% year-over-year, according to the Case-Shiller Home Price Index”

    Just to note that that doesn’t include the effect of interest rate rises. Add that factor to it (going from 3% to 5% interest) and the actual cost of purchasing a home from a monthly payment perspective has gone up an additional 20% or so on top of that 19.2%. With folks’ other expenses going up at the same time, that leaves even less free cash to pay for housing. Put all of these factors together and it’s hard to see the housing market not cooling down substantially starting this summer.

    • historicus says:

      remarkable the Fed relies on a “survey” of what your house would rent for….when Case Shiller has hard cold data. Irresponsible…..to their bias.

      • Hal says:

        Hal, what would your house rent for?

        “$250,000/mo. Minimum 1 year, payable in advance. No background check, deposit or cleaning fee!”

        Put that in your SQL Server.

  31. MarkinSF says:

    Just reminiscing the other day about a conversation back in 1972 still alive in my brain. Basically it was focused on how how amazingly great it would be to become a millionaire! You would never have to work another day in your life.
    Flash forward 50 years and everyone who owns any real estate here in California is one. The concept has been replaced by the Billionaire.
    Funny but back then I thought I was really smart. Oh well, at least my integrity’s intact.

  32. Bam_Man says:

    This is the highest CPI print since May, 1981.

    In May, 1981 the effective Fed Funds Rate was 18.30% and a 3-month CD earned an APY of 18.30%.

    Today, the effective Fed Funds Rate is 0.33% and a 3-month CD earns an APY of 0.25%.

    “Toto, I’ve a feeling we aren’t in Kansas anymore.”

  33. Marcus Aurelius says:

    OR, this is a war not between Nations, but rather a war of Nations against the people.

    An economic, social, psychological, financial war.

    The Reset? And you will be happy.

  34. Sea Creature says:

    So I am wondering then, what is one to do with money?

    Are there foreign countries or currencies that are well managed, stable and not that inflationary in the world right now that one can put money?

    Otherwise, it seems there is pretty much no way to avoid it, given we have had a massive ‘everything bubble’ now being followed by massive inflation so everything one can invest in is already now bubbly (and finally starting to ‘deflate’).

    Where do you hide / what do you do to avoid ‘real’ losses in this scenario?

    • Gomp says:

      Hunker Down, Son!

    • 8_mile_road says:

      If you keep all your money as cash, you lose 8.4% per year (due to inflation).

      If you invest your money in stock market at this moment, you could lost more than 8.4%.

      Now it’s a “head I win, tail you lose” situation

      • historicus says:

        8 mile
        dont forget the money in the stock market is ALSO going backwards at 8%…..so with the drop in stocks of 8% that equals 16%.

    • Augustus Frost says:

      The vast majority aren’t going to avoid it because there is no way for the country to avoid large scale downward economic mobility without a permanent asset mania, permanently increasing debt, and permanent ultra-loose credit standards.

      As for foreign currencies, unless you are planning to change your currency of reference by moving somewhere else, it’s just another form of speculation.

      • Sea Creature says:

        Well, I’m not sure actually. If country A is doing lots of money printing, and bubble building, and country B is managing their currency reasonably without QE and lots of printing, I would expect shifting money to country B might be a reasonable mitigation.

        People living in banana republics with high inflation year after year after year often try to ditch their currencies and get dollars or Euros for exactly this reason (though usually those same banana republics impose currency controls to prevent exactly this lest their currency falls even further).

        If it is the US being the banana republic and doing the QE / making inflation on the USD, that should devalue the USD versus other currencies not doing this eventually, all other things being equal (which granted, it may not be with the USD being a large reserve currency).

        Maybe smaller developed stable countries that are well run and manage their own currencies might be a way to hedge USD inflation / devaluation? Not sure which ones though or if this idea is even reasonable at all.

        • Augustus Frost says:

          Correct, but you’re describing another form of financial speculation.

          I currently own FXC, Canada dollar ETF but that’s not actually owning Canadian dollars. It’s a proxy.

          It’s not that easy to own actual FX in the US financial system. I once tried to buy Euro denominated bonds through Schwab but could not because of SEC regs. Minimum was also $10MM.

          You can also open a foreign bank or brokerage account. I’ve had a bank account but never the other.

          If you’re implying for someone to hold most of their wealth in a foreign currency when they don’t use it as their currency of reference, if they are wrong, their financial position and living standards are going to take a (huge) hit.

          It’s a personal choice but that’s why I would never convert most (or all) of what I have out of USD unless I was going to live in that country or pay most of my expenses with it.

  35. Thomas says:

    I must be a LOT older than the people posting here. People seem to make flip references to 1970s inflation.
    I could write a REALLY long comment but instead, allow me to give you all a list of the inflationary pressures of that era and you can look it up yourselves. You will see that comparing inflationary influences today with the 1970s era is apples and oranges.
    1. The Vietnam War
    2. The Coming of Age of the Baby Boomers
    3. The Beginning of the Age of Plastic Credit
    4. The US Currency Gold and Silver Crisis.
    5. The 1973 Middle East War
    6. The Oil Embargo
    7. The End of the Oil Boom in Texas
    8. The nationwide organized grifting and grand larceny by the mafia
    9. Labor racketeering
    10. The Office of Wage and Price Regulation

    I could write an article on each one of these topics. The regulatory structure, global trade infrastructure, the composition of the population and the workforce…all of these things are different today.

    The currency norms are different. We don’t have a defense acquisition regime that cleans out civilian supply to maintain half a million people fighting a war on the other side of the world, causing shortages.

    It’s really apples and oranges to compare the 1970s and today. Look it up yourself. Just looking at numbers on a chart isn’t sufficient to make a comparison.

    • Wolf Richter says:

      Yes, “this time is different,” always. The result is 8.5% inflation.

      But yes, I agree with your statement: “It’s really apples and oranges to compare the 1970s and today.” If you had read the article, you would have seen this line under the first chart:

      “There is no period in history that compares to this period, not even the 1970s because the Fed wasn’t printing money in the 1970s.”

    • historicus says:

      IMO all comparisons to the late 70s early 80s inflation should start and stop with this simple fact.
      In the 70s, we had a Fed that fought inflation.
      Today we have a Fed that openly promotes an inflation. (a rate of their choosing)

      • Lisa_Hooker says:

        I agree. I am still dumbfounded by the Fed insisting on any inflation rate. Any “stable” positive percentage increase is exponential.

    • Lisa_Hooker says:

      Thomas – excellent list. I would add the Cost Of Living Adjustment (COLA) that the UAW and Chemical and Rubber Workers got in contract negotiations in the early 70’s. They built in inflation for the next decade.

  36. fred flintstone says:

    Don’t you worry your little minds a bit………JP
    Its peak inflation……can’t hurt you.
    Next year it will be 7%, then 6%, then 5% for 6 years…….
    Now lets see…….8.5 plus 7 plus 6 plus 5 plus 25 equals……..a little over 50% without compounding…….see……we told you.
    Those government debts you all worried about……gone by 50%…..now don’y you feel better.
    Who paid……well…….you did. By the way…..Bill Gates and Warren Buffett send their regards for your generosity. Off to the South of France for the season. Its hard spending all that appreciation…….but……somebody has to do it.
    By the way……they have this plan to eliminate the trade deficit……it involves…….well………lets see…….when the dollar drops in value that brings more inflation to domestic consumers………lets not talk about that now……maybe when you’ve gotten more used to your new situation in life.

  37. Matthew Scott says:

    I always find the chart of the National Case-Shiller index and the CPI for “owner’s equivalent or rent,” the stand-in for homeownership costs, really interesting in that the two meet again around 2012. Can we expect it to do the same in the next housing bust? Is this a pattern we could find in the past if we applied the same methods to look at earlier periods of boom bust in housing?

  38. nsa says:

    It is foolish for anyone here to assume he somehow knows more than the cynical elites, self-dealing pols, and financial alchemists making policy. Most of them have degrees from better universities where they read and digested Keynes. Here is what Keynes had to say about inflation: “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some.” Keynes also noted: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.” Monetary inflation is meant to impoverish the thrifty by stealing their savings, while enriching the already better off through asset appreciation.

    • John H. says:

      NSA-

      Hayek pointed out the following irony in Keynes’ rehash of the Lenin line about “debauch” of the currency:

      “There are some who fear that if Lenin’s statement is correct that the best way to destroy the capitalist system is to debauch the currency, of which Keynes himself has reminded us, it will be largely due to Keynes’s influence if this prescription is followed.”
      – F. A. Hayek, Review of Harrod’s Life of J. M. Keynes

      Keynes, was instrumental in furthering the role of the Fed in inflationary government policies.

      And you are right, the policy-makers are overwhelmingly Keynesians, though some have yet to un-closet themselves.

      • Jake W says:

        no they’re not, because they forget half of keynes’ ideas, which is to pay down the debt and keep a surplus during the “good times.”

        • John H. says:

          Jake-
          “The public at large have learned to understand, and I am afraid a whole generation of economists have been teaching, that government has the power in the short run, by increasing the quantity of money rapidly, to relieve all kinds of economic evils, especially to reduce unemployment.  Unfortunately this is true so far as the short run is concerned. The fact is, that such expansions of the quantity of money which seems to have a short run beneficial effect, become in the long run the cause of a much greater unemployment.”
          – F. A. Hayek A Free Market Monetary System, lecture Nov. 11, 1977

          When/if the current inflation fighting is completed, expect much higher unemployment. If, instead. the current inflation fighting reverts back to money printing, inflationary spiral continues.

          That is the Keynesian dilemma, IMHO:
          When does the “all clear” horn blast that let’s the painful “mop-up” period begin?

    • historicus says:

      nsa
      “The printing press allows the government to tap the property of its people without having obtained their consent, and in fact against their consent. What kind of government is it that arbitrarily takes the property of its citizens? ” mises.org
      ““Inflation is what happens when people increase the money supply by fraud, imposition, and breach of contract. Invariably it produces three characteristic consequences: (1) it benefits the perpetrators at the expense of all other money users; (2) it allows the accumulation of debt beyond the level debts could reach on the free market; and (3) it reduces the Purchasing Power of Money below the level it would have reached on the free market.”” mises.org
      Inflation is THEFT, and anyone who promotes it is a thief. Take note Federal Reserve.

  39. Swamp Creature says:

    8 1/2% Inflation (Really 13.8%) is like an 8 1/2% sales tax on everything you buy.

    • Cobalt Programmer says:

      Sorry to keep you ‘ll waitin…
      1. Inflation is taxation. Fed is not elected. Thus taxation without representation.
      2. I agree with many of the commenters here.
      3. In the DC swamp area, no gas taxes until April 16th
      4. Sun and Fun are back in swamps, no worry among people about the inflation or prices. May be credit cards or may be the true wealth. People are spending money.
      5. Boomers are millennials, most do not have a financial wisdom of this blog or beloved commenters. (except the one who you know)
      6. Blame will be diverted again from one person to the other. One community to the other, one nation to the other.
      7. People are same. They want to go home, drink beer and watch TV soap operas.
      8. By the way, I went to therapy and now I am feeling like a stoic philosopher, budhist monk and a mature individual.

      • historicus says:

        Cobalt
        “Inflation is taxation. Fed is not elected. Thus taxation without representation”
        Indeed. Only Congress has the power to tax, and that may not be delegated.
        In a system that boasts of “checks and balances”, who really “checks” the Fed?
        And if it Patriotic to pay ones taxes, what exactly is it to intentionally debase the currency of a nation?

  40. unamused says:

    Obviously, what needs to be done is to cut taxes on the rich, pass more deregulation, especially financial regulations, privatize public schools, and ramp up military spending.

    Problem solved. Next.

    /s arcasm aside, formal plans to establish domination by corporations have evolved and increasingly implemented since the 1950s. Every federal official takes it from Carroll Quigley, one way or another, and very much for granted. They’ve gotten particularly grabby now because they know that there will be less in the future. They’re grabbing like there’s no tomorrow because soon enough there won’t be one.

    These guys aren’t stupid. They understand things like ecology, resource depletion, overpopulation, catastrophic climate change. And they make sure general populations are confused about these things and the political systems of every country can’t do anything about them. Ignorance is enforced and reforms are prevented.

    Why, when the situation is so clear and alarming, does it remain so stubbornly intractable to change? It is because those who have power in the world want it to be this way.

    The world doesn’t change in front of your eyes.
    It changes behind your back.

    • Gomp says:

      Wow! Just Wow! BTW first paragraph would actually go a long way in solving some problems.

      • Augustus Frost says:

        Not the way most people think of it. There is no escaping an extended period of noticeably declining living standards for the majority.

        That’s the unspoken definition of “solution”. The ability to escape the consequences of collectively living beyond society’s means.

  41. Prairies says:

    But it’s okay if you just eat lentils.

  42. Dan Romig says:

    On a global scale, my weekly Farm Net News summary from Grand Forks, ND reported yesterday that according to the United Nations Food and Agriculture Organization, worldwide food prices increased nearly 13% from February to March.

    Thirteen percent in one month???

    Plus, vegetable oil is up 23%; sugar up 7%; and meat up 5% — last month.

    And now the news is that President Biden & EPA Administrator Michael Regan are indeed pushing for E15 to be sold this summer. As corn acreage is set to decline in the USA this growing season, let’s convert it for fuel to power our motor vehicles instead of using it as fuel in human beings’ digestive tracts to power life.

  43. dang says:

    Wow, Wolf your article was superb. Food for thought. Has anyone rung the bell to warn against the possible bursting of asset bubbles.

    The main stream media and the financial markets seemed to think that the CPI report was ho hum, indicating that inflation would peak later this year.

    Implicitly, the asset markets don’t believe the Fed has the intestinal fortitude to close the bar down.

    • dang says:

      “There is no period in history that compares to this period, not even the 1970s because the Fed wasn’t printing money in the 1970s.”

      I am coming around to an understanding that discretionary monetary policy is pro-cyclical and determanitive of the long term economic structure of society. For instance, the largest industrial sector in the US economy is the FIRE sector, financial engineering (grift).

      We thought that the Fed was an arm of the USG and would set monetary policy in a fiduciary manner.

      Instead, the wildcat bank ethos has been beating in their ambitious hearts, the whole time they are interning at the Fed on their way to kicking ass and taking names on Wall Street.

      Apparently, humans haven’t been able to structure economics or finance correctly. that’s why we have to reinvent it all the time.

  44. Michael Engel says:

    1) When US was comatose with an hypodermic needle, the CPI dropped
    to zero. After two long years the CPI reached 8.5% y/y.
    2) Will the CPI reach 300% y/y or 30,000% y/y.
    3) The Fed control it’s drainage with RRP.
    4) SPX quickie to 3,400 – 3,600 with a bouncing backup will jolt inflation.
    5) Quickies don’t cause recessions. Few quickies will tame inflation.
    6) The Fed fear deflation, any type of deflation, like a baby bitten by a dog.
    7) For JP, the CPI going wild is better than deflation.
    8) The Fed have muscle memories from the thirties.
    9) A destructive deflation like the one in Ukraine is bad to the economy. The rest help the middle class.

    • dang says:

      Quite a list, some of which I agree with, not all.

      Number six captures the degree of deflationary fear that is accepted culturally, as per se true. Which relies on your point #8, the scars left on our grandparents by WW1, the dust bowl, the great depression, WW2.

      Deflation was a principle indicator of the malaise of the great depression. I agree.

  45. rick m says:

    For people who store food, the non-durables list doesn’t look so bad, until you get to fats and oils, fifteen percent on stuff that needs careful planning to get decent shelf life, can’t do without it either. Quite a few have survived for extended periods without pork and beef, the Ramen brothers sure did. Suspect that little silver package isn’t really real anything either. I don’t think that yirgacheffe coffee ordered from my reliable roaster has gone up more than five percent, but the tanzanian sure has, green coffee beans are a good bit higher now than when I bought last fall. No coffee, no life. I didn’t like the coffee at the store before it went up eleven percent. And the dairy seems very low compared to what I’ve seen and read, maybe it’s regional.

    • dang says:

      I have no experience with Tanzanian, only unobtainium, a toxic element. (joke)

      Coffee is something that I may be able to be without. Haven’t ever done it but in the order of my addictions, that one might be doable.

  46. dang says:

    I am thinking that Hyman Minsky’s hypothesis that quiescence in the financial markets is the root of later chaos in the financial markets. It seems to have been based on a life long exposure to stories in the bible describing Saddam and Gomorrah, Adam and Eve, etc.

    Do I believe in Minsky’s premise ? Sometimes.

    • dang says:

      My windshield shows a need for at least neutral, fiduciary responsibility, by the most reckless Fed, in the conduction of the monetary affairs of this great country.

      When duty becomes a joke, we’re in trouble.

      • dang says:

        Economists and commentators and all sorts of us gnash our teeth on a small segment of the US economy. The big Kahuna is the $ 2 Trillion military budget, corporate America’s solution to the problems associated with employment in the US, formerly unemployment, now I would rather starve than go back too work at that climate of fear with the implicate threat of at will firing routinely displayed. Maybe we should organize, like the United States Chamber of Commies.

        • dang says:

          Personally, I suspect the dissention began with the partisan makeup the Supreme Court of the United States of America (SCOTUS). Talk about the failures of an activist Fed, the real radicals are SCOTUS.

          Impartial dandies and debutantes my aching thing.

          They are humans who rule in a manner that their formative years instructed them was just, right wrong or indifferent It’s ultimately just some coddled a^^hole’s opinion. Like the election of George Bush.

          Brings back memories of the televised attack on Iraq for the atrocities committed in NYC by the Saudis.

  47. Double Bluff says:

    The high class dry food my wife feeds her dog is $4 per pound. The pork and chicken we eat is approximately $3 per pound. Sorry dog, you’re going to have to start eating people food.

  48. Franz Beckenbauer says:

    There’s an official winner in the race of the big three fiat currencies as to who would be the first to get totally burned now. It was a close call, and Chrissie tried her best, but the winner is (drum roll): The japanese Yen, which the BoJ now has officially sacrificed (it’s just that nobody at MSNBC noticed yet- they still have to talk about some laptop of some crackpot. Talk about priorities) . So it will be a close second for the Euro and Chrissie, maybe enough time for her to buy another 2.000 EUR Chanel suit before she has to pay for it in something real, which she does not have and is not in business for.

    And the dollar will be the last to fall. The bronze medal of doom if you will, but fall it will. And soon. Once these things get started and the first snowflake falls in the wrong – or right, depending on your positioning – place, the avalanche follows rather quickly.

    Got gold ?

  49. HotTub Marmalade says:

    @Winston

    “See:

    ‘Children of Men’ is really happening
    Ed West, Mar 10 2022

    Very bad demographic issues worldwide.”

    Just checked out this movie from my local library. Will watch it tonight. Thanks for the recommendation

  50. HotTub Marmalade says:

    @Here It Comes

    “Young kids and those yet to be born will likely be of the “Strong men create good times” ilk… They will have grown up in times that are difficult and will have a very different perspective on the world.”

    Yep, just as my folks did. They became the “Strong men create good times” era. Born in the mid 1920s, they grew up during the Great Depression, seeing all the devastation of the hard economic times of those years.

    Ironically, my dad told me later in life that his father had a very good job during the ’30s. Grandpop worked on the New York-Penn railroad as a supervisor at a roundhouse. But the problem was, every Friday night he’d go to the bars and drink his paycheck away, leaving the family in very precarious financial straits.

    My dad learned a big lesson from that. Did not drink, did not overspend, went to college on the G.I. Bill, saved money once he started working, and never stopped working his butt off.

    In turn he made me work my butt off after the high school year ended once I turned 16. Walked into my bedroom the Monday after school let out and said “get up.” I remember asking why and he said, “because you’re going to work.”

    He got me a job in a time clock factory. From that summer on, I worked in that factory every summer until I graduated college. That’s where I learned about work ethic, being on-time, responsibility, and earning whatever it was that I wanted.

    Do I see work ethic in young kids today? Some have it, but many, many don’t; they just want everything handed to them. We’ll see how it goes but if I were a betting man, I’d be wagering on another Great Depression in the very near future as I believe we’re heading into the “weak men create hard times” portion of the Cycle of Prosperity. The next generation of youngsters will have it much harder but hopefully they learn like my folks did.

    • RT says:

      I am glad to hear that you have a father that really cared about you and taught you many of the important lessons in life. Sadly, many of the young people I work with today ( I am a teacher) do not have these concepts and let alone characters. Actually, the parents of the students that I work with are the real problem. These parents may try to work hard themselves, but they do not teach their children. They bought into the modern educational and children rearing philosophies and they let their kids run the show.

      Especially after COVID, I have seen a great reduction in student motivation across the board. Every teacher can tell you how bad it is. It was bad before covid. After covid it is even worse. 50 to 80% of my students do not want to do anything even when everything is almost given to them on a silver plate. These children are the ones that will be shocked and awoken to a totally different world when the economy crashes around them.

      But it will be the only way for these children to learn. And so I think it might turn out to be a good thing after all. But in the mean time, you can see that especially after covid, most of the teachers (those who truly want to teach) are all burning out and getting very discouraged. I don’t see the trend changing in the short term. So for those who have children, it is way past time to take your children out of public education centers. Take them to a real school or learning community, home school, Christian schools, co-opt, etc, where they will can receive real education.

      • HotTub Marmalade says:

        RT, I agree 100% with your comments, and I especially think you nailed the problem with this one:

        “Actually, the parents of the students that I work with are the real problem.”

        I believe parents aren’t being parents. They’re being mommies of daddies to their kids, and they continue this mentality as these kids hit their teenage years. MOMMIES and DADDIES dote on their little ones, which is fine in their pre-adolescent years, but PARENTS prepare the kids to survive in the REAL world. Well, as you said, “These children are the ones that will be shocked and awoken to a totally different world when the economy crashes around them”.

        I hear too many stories of kids today saying that their “parents” are their best friends. Well, in my world, my dad was not my friend. He actually told me during a discussion one night at dinner when I was sixteen that “I’m not your friend, I’m your father.” What that taught me was that he was going to do whatever it took to keep me on the straight-and-narrow, regardless of how hurt my feelings might get. And he followed through with his actions.

        For example, he told me that if I got in trouble, he wasn’t automatically taking my side in the matter; he was going to research the issue, and if I was at fault, there would be repercussions. Well, I got in trouble doing something way back then, and remember being grounded for a week because his research showed him that I was at fault, which I was. Whatever it was I did, I never did that again.

        How many “parents” do you hear these days say that their kid(s) wouldn’t do this or that, because they’re good kids? Basically automatically assuming their kids’ innocence. Good grief.

        I could go on and on, but basically, it’s the last phase of the Cycle of Prosperity:

        Hard times create strong people;
        Strong people create good times;
        Good times create weak people;
        And weak people create hard times.

        You know where we’re headed.

        • HotTub Marmalade says:

          I wish my dad was still alive. I’m sure we’d have some great chats.

  51. Raymond Oliver says:

    I placed this article in my bookmarks folder “The Fourth Turning”, named after the book by Strauss and Howe. The current 4th turning started in 2008 and will end 2030 or so, based on generational theory. Inflation can be a big component of an economic crash which often occurs during a 4th T. Just one aspect of the current 4th T crisis, which is looking like a doozy with geopolitical aspects and abrupt climate change thrown in.

  52. RT says:

    Question:

    The CPI has been adjusted several times since the 1990s. What would be the real CPI-U if we continue to use the old methods of calculation? Wouldn’t that be more realistic to show us the real rate of inflation?

    Also, how do the lost of the purchasing power in USD compare to other major currencies, like the EURO, Chinese Yuan or Japanese Yen?

    And what if we use gold as a comparison? In 2000, average gold price throughout the year was about $280/oz. In 2022, gold price is about $1900/oz. If we use gold as a metric, then the USD lost about 85.3% of purchasing power, rather than 41.2% purchasing power. Wouldn’t using gold as a metric reflect more about the state of the USD?

    • Wolf Richter says:

      The basket of goods and services changed too. A lot of things that people spend money on today didn’t even exist in 1990, such as streaming, smartphones, supercomputers dressed up the laptops, etc. It’s a different world.

Comments are closed.