I am one such transactor. always put my cc down at dinner w friends and venmo. never not paid monthly balance. rack up points and never pay for flights. I’ve even used BNPL because why wouldn’t I? it does strike me as an odd concept tho...and while I thought maybe (hoped) most using BNPL are like me, that 7% is awfully low. all told it doesn’t exactly seem like a long-term sustainable concept and one that shouldn’t have ever gotten going in the first place. but hey, that’s ZIRP for ya.
Changes (jimmying) that keep on coming, since the CPI methods/models for measuring inflation since the 1980's. Per Luke Gromen:
US BLS methodology changes for CPI that were discussed but not implemented in 2021 (when inflation was still considered transitory) will now be implemented next month:
In August 2021, the BLS announced interventions were considered to mitigate possible measurement errors caused by the COVID-19 pandemic during 2020, but the standard biennial update procedure was ultimately chosen. -US BLS, 2/25/22 (when US policymakers still believed “Inflation is transitory”)
Starting with January 2023 data, the BLS plans to update weights annually for the Consumer Price Index based on a single calendar year of data, using consumer expenditure data from 2021. This reflects a change from prior practice of updating weights biennially using two years of expenditure data. -BLS, 5/24/22 (when US policymakers realized “Inflation is no longer transitory”)
Beginning with January 2023 data, BLS plans to adjust the weighting method for Owner’s Equivalent Rent (OER) in the CPI. The new method will use neighborhood level information on housing structure types to weight OER’s unit sample observations. -BLS, 9/2/22 (when policymakers realized “Inflation is no longer transitory”)
"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."
Lower reported CPI reduces the impetus on the Fed to tighten, which weakens the USD (especially given recent tightening by the BOJ and ECB and Chinese re-opening), which injects liquidity into global markets, which drives asset prices higher, which improves US government tax receipts AND increases FX-hedged UST yields (thereby improving UST demand and UST market functioning.)
Lower-than-expected reported CPI for the next 3-6 months would check a lot of boxes for a US government that is staring into the abyss of a 2023 fiscal crisis for reasons we have highlighted in the past, at a time when investor sentiment (including ours, up until last Friday) is “Risk off, USD up, Fed cannot engineer a soft landing” (esp. now that the debt ceiling debate has renewed.)
For sure. They absolutely WANT a high inflation rate, certainly much higher than 2% (and especially their legal mandate of "stable prices"). Many goofballs are already saying we "need" a 4% or higher target. Mostly very wealthy asset owners, their media simps and pet economists. They just don't want real-world inflation to go so high that people revolt. The plan has always been - for decades - gaslighting. "No, inflation is not 10%, or 20% - it's 5%, and it's plummeting(!) - and this other thing we made up that excludes food and energy and other things necessary for survival is only up 3.x%!"
Basically, they lie.
Financial Repression. Russell Napier says "The Federal Reserve is "preparing to inflate away debts but are looking for "widespread societal understanding and acceptance" before doing so." Society isn't that stupid so they need all the BLS's tricks to keep reported inflation as low as possible. To them, it's the only way out because the alternative would bankrupt some major political donors.
"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
Russell also says (and I paraphrase) inflation is stealing money from old people....slowly.
We are on the same page, that these folk's actions cannot simply be misguided. I truly believe the level of hubris as the ostensible smartest guys and gals in the room (as you have stated ad nauseum) is criminal. Then there is the evil Imperial City/Big Apple axis acting as pied pipers for the clueless, second rate manager holding the reigns of power. Yet what is the re-election rate? Something in the 90% range.
I recommend "Confessions of Congressman X'. If one is not totally cynical, you will be after this brief read. Nothing that happens in the Imperial Capital should surprise anyone.
“I’m a transactor and I’m proud.”
I’m going to guess that we transactors are over represented in this audience group.
I will say one good thing about Twitter. If it hadn’t been for them, I never would have found Rudy Havenstein.
Just where do you get off asking for charts more than 2 years old?!
I am one such transactor. always put my cc down at dinner w friends and venmo. never not paid monthly balance. rack up points and never pay for flights. I’ve even used BNPL because why wouldn’t I? it does strike me as an odd concept tho...and while I thought maybe (hoped) most using BNPL are like me, that 7% is awfully low. all told it doesn’t exactly seem like a long-term sustainable concept and one that shouldn’t have ever gotten going in the first place. but hey, that’s ZIRP for ya.
Check out this article about a $16.89 “value meal” at a McDonalds in Connecticut!
https://www.the-sun.com/news/7824508/most-expensive-mcdonalds-value-meals-country/
The good news is that the price drops to $3.89 with hedonic adjustments considered.
Changes (jimmying) that keep on coming, since the CPI methods/models for measuring inflation since the 1980's. Per Luke Gromen:
US BLS methodology changes for CPI that were discussed but not implemented in 2021 (when inflation was still considered transitory) will now be implemented next month:
In August 2021, the BLS announced interventions were considered to mitigate possible measurement errors caused by the COVID-19 pandemic during 2020, but the standard biennial update procedure was ultimately chosen. -US BLS, 2/25/22 (when US policymakers still believed “Inflation is transitory”)
Starting with January 2023 data, the BLS plans to update weights annually for the Consumer Price Index based on a single calendar year of data, using consumer expenditure data from 2021. This reflects a change from prior practice of updating weights biennially using two years of expenditure data. -BLS, 5/24/22 (when US policymakers realized “Inflation is no longer transitory”)
Beginning with January 2023 data, BLS plans to adjust the weighting method for Owner’s Equivalent Rent (OER) in the CPI. The new method will use neighborhood level information on housing structure types to weight OER’s unit sample observations. -BLS, 9/2/22 (when policymakers realized “Inflation is no longer transitory”)
The massaging never stops.
"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
Gromen's conclusion:
Lower reported CPI reduces the impetus on the Fed to tighten, which weakens the USD (especially given recent tightening by the BOJ and ECB and Chinese re-opening), which injects liquidity into global markets, which drives asset prices higher, which improves US government tax receipts AND increases FX-hedged UST yields (thereby improving UST demand and UST market functioning.)
Lower-than-expected reported CPI for the next 3-6 months would check a lot of boxes for a US government that is staring into the abyss of a 2023 fiscal crisis for reasons we have highlighted in the past, at a time when investor sentiment (including ours, up until last Friday) is “Risk off, USD up, Fed cannot engineer a soft landing” (esp. now that the debt ceiling debate has renewed.)
For sure. They absolutely WANT a high inflation rate, certainly much higher than 2% (and especially their legal mandate of "stable prices"). Many goofballs are already saying we "need" a 4% or higher target. Mostly very wealthy asset owners, their media simps and pet economists. They just don't want real-world inflation to go so high that people revolt. The plan has always been - for decades - gaslighting. "No, inflation is not 10%, or 20% - it's 5%, and it's plummeting(!) - and this other thing we made up that excludes food and energy and other things necessary for survival is only up 3.x%!"
Basically, they lie.
Financial Repression. Russell Napier says "The Federal Reserve is "preparing to inflate away debts but are looking for "widespread societal understanding and acceptance" before doing so." Society isn't that stupid so they need all the BLS's tricks to keep reported inflation as low as possible. To them, it's the only way out because the alternative would bankrupt some major political donors.
"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
Russell also says (and I paraphrase) inflation is stealing money from old people....slowly.
We are on the same page, that these folk's actions cannot simply be misguided. I truly believe the level of hubris as the ostensible smartest guys and gals in the room (as you have stated ad nauseum) is criminal. Then there is the evil Imperial City/Big Apple axis acting as pied pipers for the clueless, second rate manager holding the reigns of power. Yet what is the re-election rate? Something in the 90% range.
I recommend "Confessions of Congressman X'. If one is not totally cynical, you will be after this brief read. Nothing that happens in the Imperial Capital should surprise anyone.
I'm afraid of sliding from skepticism to cynicism. It'd be so easy. I try to keep hope alive, to quote Jesse Jackson.
https://youtu.be/R3ZJKN_5M44
Still not paying $8 to create content for Twitter.
FANG FAANG MAMAA is one of my favorite japanese punk rock bands.
can someone call my phone? its not in the couch.
n!
that's what you get for posting One Direction! devils music
Yep. If I remember, it was a cute wholesome video. I didn't notice the music