Wednesday, October 6, 2010

A dichotomy?

An interesting dichotomy showed up in the reports today. The first is that spending by the middle class is through the floor. Next, wages have fallen in actual dollars (New York, in this example). Usually, this results in the price of goods and services to go down as a result of Supply and Demand (market forces).

However, the most recent reports are that prices are actually going up. In the case of commodities, the prices are sharply up. Oil and Gas, Wheat, Corn, Pork Bellies (Bacon) are all up between 7% and 37% in recent months. Is this a dichotomy? Maybe. Maybe it is not supply and demand that is driving the prices of commodities right now.

Karl Denninger points out that the currency is being devalued at a rate (compared to commodities) >200% annually right now. For all goods and services which trade in Dollars, this means that it takes more of them to purchase the same value of goods in real trade terms. So, while your wages are going down in actual dollars, and your taxes are going up as a percentage of wages earned, your ability to purchase goods and services is being cut drastically by the Fed and their policies.

Recent stimulus acts pumped more than a TRILLION DOLLARS into the economy, with no immediate effect on inflation. The underlying reason for this was that the bulk of it went to prop up reserves at the banks (to prevent nationwide bank failures) and to cover the losses due to fraud in the mortgage industry. The Government helped their cronies in the banking industry (the Banksters) hide the true breadth of their fraudulent activities to prevent massive civil (un-civil?) disruptions by the general public.

Now those Billions upon Billions are starting to make it out to the market. Meaning that the flow of currency in the market is accelerating and we are seeing the start of massive inflation in commodities prices. Right now, the US Dollar is the world's reserve currency. What do you think the outcome will be globally when the reserve currency begins to rapidly inflate?
"...and I beheld a black horse; and he that sat upon it had a pair of scales in his hand. And I heard a voice...say, "a measure of wheat for a day's wages, and three measures of barley for a day's wages, but do not damage the oil and the wine""REV 6:6
Famine, perhaps? Or worse?

This nation is divided right now, more so than ever before. We are a nation of the Ruling Class on one side, and everybody else on the other. Those people of the ruling class depend upon your willingness to continue being fleeced by them. Everybody who is a member of the ruling class, and the bureaucracies that support them, depends on you to keep them fed. You keep them fed, sometimes at the expense of your ability to feed your own family, because you are law-abiding. For now.

Think about that. Then, Vote in November. Reverse this trend before it destroys our Country, if it hasn't done so already.




Alan said...

$1300+ an ounce for gold, and it's going higher (for now).

Gold is a crappy "investment" but a great hedge. The ruling class is buying gold like crazy right now.

Of course you can't do much with gold and you have to sell it to someone else eventually or you've got a pile of worthless yellow metal.

I wonder who they plan on selling it to?

ZerCool said...

My fire department does pancake breakfasts during the winter. We raised prices (for the first time in about five years) because our materials cost went up so far. Largest increase: bacon. From $28/15lb box to $49/15lb box.

Yes, a 40% increase.

We're shopping for new suppliers, but who knows how successful that will be.

Farm.Dad said...

On the Supply side , let me assure you that the rancher is not seeing a windfall in profits . It costs more now than ever to bring a calf to market .

Old NFO said...

Let's hope we don't end up in a hyperinflation situation...