Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Astonishing Inflation Data from the BLS

Economics / Inflation Dec 28, 2009 - 12:42 PM GMT

By: Larry_Edelson

Economics

Best Financial Markets Analysis ArticleWith the new year rapidly approaching, not much is happening in the markets. So I’d like to take this time to show you some stats that simply amaze me.

Even more astonishing, the figures I’m about to review with you are most likely conservative, and err on the low side of the spectrum.


I’m talking about inflation data courtesy of the Bureau of Labor Statistics (BLS).

I find the stats startling because it’s proof positive that inflation is far from dead. And as I just mentioned, even more so because the BLS’s inflation data is contrived and manipulated to almost always show less inflation than there really is.

Consider the following price increases which have occurred since the beginning of the financial crisis in October 2007.

In the 24 month period since then, a time when deflation was supposedly striking everywhere

arrow Some Pretty Amazing Stats ...  Food and beverage prices increased an average of 5.6%

arrow Some Pretty Amazing Stats ...  Cereal and bakery prices jumped 11.5%

arrow Some Pretty Amazing Stats ...  Sugar and sweets prices, up 11.8%

arrow Some Pretty Amazing Stats ...  Cooking oils, up 11.6%

Meanwhile …

arrow Some Pretty Amazing Stats ...  The cost of medical care increased an average of 6.7%

arrow Some Pretty Amazing Stats ...  Medical care services, up 7.1%

arrow Some Pretty Amazing Stats ...  Hospital services, up 14.0%

arrow Some Pretty Amazing Stats ...  The cost of education (tuition) at private schools jumped 10.7%

arrow Some Pretty Amazing Stats ...  Educational books and supplies, up 14.9%

About the only sector of the economy where prices either fell or rose modestly is, not surprisingly, housing, where the overall cost of providing shelter for a family rose a meager 2.4%. But even that is a far cry from the deflation everyone is talking about in housing.

The seeds of inflation have not only been sown, they've been sprouting since the financial crisis began.
The seeds of inflation have not only been sown, they’ve been sprouting since the financial crisis began.

So what does all this mean? As I said earlier, considering that these figures cover a 24-month period where deflation was supposedly striking every sector of the economy, it means inflation is not dead. In fact, it’s not even close to dead.

It’s merely hibernating for a bit, waiting to bust wide open.

I believe 2010 will be the year where most are shocked at how much inflation takes off.

It’s inevitable. Periods of deflation in this country have been few and far between, and when they occur, they last no more than about three years. Then, prices take off to the upside again.

It’s going to happen. No doubt about it. There is no way that inflation cannot explode upwards when …

A. The Fed has printed well over $2 trillion in fiat money which it will have a hard time extracting from the public now that it’s out there, no matter what the Fed says.

B. Washington itself is flat broke and will need to print even more monopoly money to keep itself going.

C. Most natural resources and life’s basic necessities are in short supply, while demand for them is soaring worldwide, especially in Asia.

D. Companies all over the world need to actually raise prices to get back some sort of decent profit margins.

E. The government is getting involved in healthcare, which, unquestionably, will be inflationary for almost every aspect of life down the road.

And more!

But mark my words: The inflation that I see coming will be unlike past inflation waves. It will not be driven by wages, labor unions, or even by rising oil prices.

Instead, it will be driven almost exclusively by the long-term demise of the dollar, which despite a recent rally, will continue its decline yet again in 2010.

And, it will be driven by uncertainty … by the growing recognition that Washington (and other governments) is broke … and more.

My view: Don’t bet on deflation. It’s largely already come and gone.

So what can you do to protect yourself from the inflation I see coming? Invest your money based on the fact that the dollars in your pocket will not be worth much in the future. That means seeking out investments, such as tangible assets, that protect and grow your wealth as paper monopoly money loses its purchasing power.

Best wishes for a healthy and happy New Year!

Larry

This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

sharonsj
04 Jan 10, 14:30
BLS inflation numbers

Thanks for this great info. I have been searching for articles on food inflation at all the financial sites--with no luck until now. Yet I am appalled at the jumps in prices that I have been seeing for over a year--and I never see anything in the mainstream media.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in