Other than the 9.1% CPI print, how was the play Mrs. Lincoln?
OK, so the official U.S. CPI came in at 9.1% year-over-year, but if you hedonically-adjust for the fact that it’s better inflation, prices were actually flat! (If this makes any sense to you, go apply at the BLS or the Fed. They have ridiculous pay and benefits.)
CNBC was doing their usual propaganda - Fed Policy Working? (always the question mark!) They were excited about how gas prices are “down 38 cents since June 15,” while not showing this:
Now imagine what CPI would be without the hedonic-quality adjustments, the goofy weightings, and the arbitrary substitutions they’ve introduced in recent decades?
What if they actually realistically measured housing, or health insurance costs?
CPI would be a lot higher. My (conservative) rule of thumb is to just double (or triple) the official rate, depending on your mood.
"Every single adjustment to CPI calculation has ended up with a lower CPI. No one has ever adjusted it and come up with a higher number. So, we, we know what the adjustments are there for." - Grant Williams
"CPI readings can’t help you...the CPI does NOT measure the general price level...It’s not designed to do so; it serves other aims...it’s been repeatedly altered, with each change serving to reduce the reported figure." - Steve Bregman
I think I may need to move my money to a more stable country, like Mexico, which only has 7.99% inflation (and a 7.75% benchmark rate), or Namibia, with 5.4% CPI (and a 4.75% policy rate.)
Sadly, we live in a banana republic, where the Fed sits at 1.58%, which by my math puts them at a negative 7.52% real rate. The counter-argument is that the Fed is impotent because they can’t control Putin or wheat or the Port of Los Angeles, or much of anything, so let’s give them even more power without accountability!
Meanwhile, we’ll find out later today how much QT has been going on. I’d guess not much. I have annotated Ed Yardeni’s chart below:
As I’ve joked, the Fed is the orphan everyone feels sorry for, although they forget the Fed murdered his parents.
To quote a now-banned Twitter user, The fact that the Fed is painted in a corner is 100% the @federalreserve's fault. They had years to QT Taper Normalize Liftoff etc. & blew it. Citadel Ben started the whole nonsense. Yellen in particular was asleep at the wheel 2014-2018, and Jerome chickened out in Dec. 2018.
As the Zerohedge points out, Americans’ real wages fell for the 15th month in a row.
It would have been nice if ANYONE with a bigger megaphone than me had asked why we were allowing these Fed clowns to INTENTIONALLY do this:
CNBC is again all over the “inflation has peaked” thing, and everyone on is so bearish all they can talk about is what stocks to buy. Upton Sinclair was right.
I wrote in May 2021:
Even if the "inflation is transitory" nonsense were true - what they're really saying is, "the current huge spike in the cost of living will transition to a more typical spike in the cost of living."
That’s what we have to look forward to - best case scenario: A return to 2% CPI (which in reality is more like 6% or 7% real-world inflation.)
This is a visual (I posted in Dec. 2021) of what nonsense the CPI is: New car prices supposedly basically unchanged from 1995 until early 2021, now spiking.
Note that the only times in the past we were at this level of CPI the Fed policy rate was well over 10%, not 1.58%. (Also, if we calculated CPI the same as we did in the 1970’s, current CPI would be at or above those prior peaks.)
Now I understand the argument is, “We can’t raise rates because too much debt!” Gee, how did that happen? Every single government and central bank policy in this era of parasitic financialization has been designed to get everyone into more debt.
We’re now seemingly in some sort of weird suicide pact with our elites - either keep the status quo going, where the very top are getting more and more, and everyone else less and less, or they’ll shoot the dog!
Again, forget the propaganda narratives you get from the Fed, the politicians, the BLS, Bloomberg, CNBC, the FT, David Zervos and the New York Times - Look at the results!
Fidelity sent me this today. Join PIMCO senior advisor Ben Bernanke for insight from this heroic failed regulator and serial policy disaster, who got us firmly on our current road to ruin, after sleeping through that last asset-bubble bust. He’s very, very wealthy now. I hope this sociopath catches Monkeypox.
A couple of years ago, a digital marketer on Twitter said something that stuck with me: “One email subscriber is worth 100 follows.” It’s not an exact science, of course, but the point is you don’t own your audience on social media platforms. I found that out the hard way.
Yeah, I found out too.
On the bright side, I’m up to about 8,000 Substack followers, which if the above is true puts me at the equivalent of 800,000 Twitter followers (which I will round up to 81 million.)
Anyway, Substack is growing on me, and while I appreciate the many nice people who have argued for my return on the other garbage site, to hell with the Twitter. I hope Paraga and Vijaya eventually lose their jobs, and to survive have to resort to cleaning Elon Musk’s pool, or become dog walkers for Donald Trump, or something.
Then again…Substack is laying off 14% of its staff.
They have shelter up 5.6% over the past year. Food at home? Up just 12.2%. Restaurants? Up just 7.7%. I must have weird expensive tastes (even though I am frugal) because my personal experience is quite a bit higher than that -- like real numbers I see from Quicken.
And the big news today is the possibility of a full 100bp hike at the next FOMC meeting which is considered "aggressive" ... Fed Funds would still be under 3% with official inflation running over 9% and real inflation experienced by normal people running god knows what, but well into double digits.
At this point, the official numbers are pure gaslighting.
Great read for all average inflation enjoyers. 9.1/10