Telling Americans that there is NO inflation (or just contained/constrained inflation) is a great Ponzi scheme used to screw the masses (working-class and poor).
If you really look at stuff and other of life’s tangible
products, and you like me feel that they are far more expensive than they were
11+/- years ago, “they are” as it is likely because everything in reality
is more expensive than it was then (called inflation, but do not tell the
masses who have been like Pavlov’s conditioned to believe that inflation does
not exist). Let us take a look at real estate, it costs more than ever
to buy a home than ever before despite historic low interest rates. In
1940, the median home value in the U.S. was $2,938,
40-years later in 1980, it had risen to $47,200, and in just another 20-years
later in 2000, it had risen to $119,600; when we do the math and adjust
for the government’s “BS” bogus inflation numbers, the median home price
in 1940 would have increased to $30,600 in 2000 dollars, not $89,000 higher!
Ø One
reason why the typical homebuyer is now running into the age range of 44+/-
years old (many are still living with mom & dad) whereas in 1981, the
typical homebuyer fell into the age range of 25-34. Ans it is also significant harder to rent; in
the past 5-years alone, the annual rise in rental prices was nearly 4x the
overall inflation rate.
During the past 20-years....NO
housing inflation right 😊
- Median Home Price (NSA) in 12/01/2000 = $139,815
- Median Home Price (NSA) in 12/01/2005 = $210.371
- Median Home Price (NSA) in 12/01/2010 = $175,569 (a drop after the great housing bubble burst)
- Median Home Price (NSA) in 12/01/2015 = $215,206
- Median Home Price (NSA) in 06/01/2020 = $278,621
- And the most recent FED data for 2020/Q3 the price for median home sales came in at $324,900
Now let us look at another over-looked segment called education is also is significantly more expensive for average Americans than ever before. The total 2020-2021 cost of attending Harvard was $49,653 for tuition and $72,391 for tuition, room, board, and fees combined...Before 1960, it cost less than $1,000 to attend the university. Since 1980, the cost of tuition has steadily been on the rise, costing $13,085 in 1990, $22,054 in 2000, and $33,696 in 2010. That makes the cost today almost 18x as much as in did in 197 a markup of more than 1,590%. The rising cost of higher education has led many Americans to owe a collective $1.4 trillion in student loan debt.
Back just 8+ years ago in
2012, 71% of graduates from four-year colleges carried debt, with students at
public schools owing an average of $25,550 and those with degrees from private
colleges owing an average of $32,300 according to the research done at Student
Loan Hero reports.
And as the U.S. supposedly recovered from the stupid-ass TBTF-Banker-led
Great Recession, the cost of consumer life sustaining and needed goods has
steadily risen as depicted by significant price jumps in items like apparel,
shoes, food, education, property taxes, healthcare and health/dental insurance and
gasoline for starters. While some prices have risen more drastically than
others (and some have even decreased those associated with some electronics
etc.) one thing is clear: The cost of everyday life in 2020 is drastically
higher than it was in the 1970s or 1980s and 1990s despite the rhetoric and
hype on the financial networks and from the FED stating that inflation is
significantly contained and constrained!
As Helaine Olen wrote in her book “Pound Foolish,” families in the 2000s put 79% of their discretionary income toward their housing, health care and education, as compared to 50% families used to put toward those same big-ticket items in the 1970s. Now of course even I can see that wages have risen as well: For example, the Federal minimum wage in 1945 was a paltry $0.40 per hour. (when I stated working it has risen to $1.75...we saw that in 1980, it had risen to $3.10. And in 2009, it rose to a staggering $7.25 (grin), though several states have since mandated higher minimums. But these increases have not been even come close to offsetting the cost of living / real life inflation. These days, a family can NOT live within any state working 40 hours a week for minimum wage as still it does not enable a person to rent a low cost two-bedroom apartment, let alone begin building any real wealth for the future; this is a crying shame as from my extensive research over the years we have seen a one-wage income earner household become extinct and replaced by a two- wage earner household, and far too often to make ends meet we see the family unit needing 2½ jobs to make ends meet!
The 40-hour work week is now merely an illusion, a myth for
far too many Americans (like the American dream has become) a legend from years
past. In many modern workplaces, you are more likely to see a Leprechaun at
work than an employee who punches in at 9:00am and out at 5:00pm. This does not
mean that today’s workers work less than 40 hours, and in many cases the
opposite is true. Many knowledge workers start working the minute they roll out
of bed. They check emails at their breakfast table or hop on early conference calls
with dispersed team-members and overseas customers. By the time they roll
into the office, many have already worked 2 or 4 hours. This so-called “BS” hyped work freedom is not always a good
thing. As the absence of boundaries between work and life can have
long-term detrimental negative effects on actual employee productivity and overall
performance.
Over 80+/- years ago, it was normal for people to work an average of 70+ hours each week; at one-point a few generations ago employees (including children, yes children as my grandmother were forced to work in a textile mill at age 12) were required to work 14-hour days. All of that changed in 1926 when Henry Ford standardized the 40 hour work week. [The Ford Motor Company then advanced the premise in 1914, when it scaled back from a 48-hour to a 40-hour workweek after Henry Ford believed that too many hours were bad for worker’s productivity. The formation of trade unions also helped to strengthen the idea of working five days a week as was healthier than 6-7] His classic independent research showed that folks working more yielded only a small fractional increase in productivity, and before long productivity actual declined. Finally, in 1938, the 40-hour work week became law via the Fair Labor Standards Act. But do not get your hopes up for a reduced workweek just yet, this law only applies to hourly employees and it referenced getting paid for over time!
The story of run-away inflation in the US this New-Year “2021”
could very well amount to the need for a renewed hyped rhetoric calling it a
complete mirage and a figment of our imagination! Most Americans are likely to
see significant prices jump across a wide variety of sectors this year, thanks
in part to massive and I mean massive Fed and governmental stimulus (close to
$5 trillion and counting and Covid-19 vaccines that will potentially
turbocharge, overall new demand for such post pandemic victims of shut-downs
etc. like travel, entertainment, bars, sporting events and other social gatherings.
Now due to the weak dollar we have seen prices also rising for many (housing
and construction) inputs such as copper, cement and lumber, inflation could
very well surpass the FEDs bogus 2.0% target in a mere 2-3 months. Currently through
bond activity financial markets are increasingly pricing in higher inflation
and debates over whether the central bankers should start easing back on their
record monetary stimulus may step up and intensify.
But one critical ingredient will likely
be missing according to the inflation hypsters to sustain higher inflation: a
tight labor market is needed; unemployment is expected to remain significantly
elevated throughout the year, and a resurgence in demand for services could be
offset by some goods. Far too many so-called economists think inflation is
going to be quite muted likely because unemployment will still be high, and there
will still be significant slack in the labor market, which could keep some
pressure on wages (nevertheless if prices rise and wages do not this is a
terrible economic mix). This year will be a year plagued by numerous inflation-worries.
I am betting more and more, that inflation will not stay so stealthy muted. Services
make up about 60% of the overall consumer price index and 75% of the core
measure, which excludes food and energy.
In a Bloomberg Opinion piece, former New York Fed President Bill Dudley wrote that a rebound in spending on services suggests “sharp price increases might even be needed to balance demand with the available supply, which the pandemic has undoubtedly diminished.” Read the article: Five Reasons to Worry About Faster U.S. Inflation. Those who see few signs of excess inflation “could be setting themselves up for an unpleasant surprise,” Dudley said. One issue in the pipeline: so-called base effects will lead to higher inflation. Price indexes early this year will be compared with the sharp retreats experienced in March and April, which may push inflation above, the FED’s 2.0% bogus premise/goal. Many gauges of input prices and costs paid by firms has also been rising as of late, though factories still have plenty of slack in capacity.
Lame-central bankers adopted a new policy framework in August and signaled a significant willingness to allow PCE inflation to exceed their target for quite some time. In 2019 we had a really perfect storm for higher inflation, with low unemployment, goods tariffs, and a weaker dollar from prior years. And that really only got us not even back to the FED’s core inflation objective, so achieving above-target inflation is a really difficult thing for the FED as they make up the data to suit their needs. This past December at 6.7% in November, the jobless rate is almost twice as high as it was in the closing months of 2019, when it stood at a five-decade low of 3.5%...yest the SOB corporations have significantly depressed worker compensation costs as they were again decelerating.
I am betting that another sector that may experience higher inflation is medical care, as providers and beaten-up hospitals try to recoup some of the massive revenue lost during the pandemic. Another factor is that inflation expectations remain well within their historic range due to suppressed data.
An often-overlooked area of massive inflation: This chart blow explores recently released National Health Expenditure (NHE) data from the Centers for Medicare and Medicaid Services. These data offer insight into changes in health spending over time as well as the driving forces behind spending growth. Health services spending growth fell in early 2020 due to the Covid-19 pandemic and (costs that were frozen in place)!
The Quarterly Services Survey (QSS) is one way to look at
national health spending, though it
does not include data on prescription drugs, medical
equipment, and other health-related spending categories that are not considered
services. The pandemic led to a historic decrease in health services
spending due to social incessant social distancing and the delay or
cancellation of other medical procedures. In the 2nd quarter of
2020, health services spending fell by -8.6% over the 2nd quarter of 2019. While health
services spending increased in the third quarter of 2020 (1.3%) over the same
time in 2019, year-to-date health services spending through the third quarter
of 2020 was down by -2.4% (relative to the first three quarters of 2019). Before
the pandemic, total health expenditures increased substantially over the past
several decades....and this is a huge economic weight for the poor, working
class and vanishing middle-class!
Health care spending totaled what we thought was a significant high number of $74.1 billion in 1970. By 2000, health expenditures reached over $1.44 trillion, and in 2019 the amount spent on health more than doubled that to over $3.8 trillion. Total health expenditures represent the amount spent on health care and related activities (such as administration of insurance, health research, and public health), including expenditures from both public and private funds. On a per capita basis, health spending has grown substantially above the rate of pro forma inflation!
On a per capita basis, health care spending
has increased over 31x in the past four decades, from $353 per person in 1970
to $11,582 per person in 2019. In constant 2019 dollars, the increase was about
6x, from $1,848 in 1970 to $11,582 in 2019 but the figures do not lie as health
care spending growth has far and I mean far outpaced growth of the U.S. economy.
Another way to look at the spending trends is to look at what share of the economy is devoted to health. In 1970, 6.9% of the gross domestic product (GDP) in the U.S. was spent toward total health care spending (both through public and private funds). By 2019, the amount spent on healthcare has increased to a whopping 17.87% of GDP. From 2016 through 2019, the share of GDP attributable to health spending decreased slightly from 17.97% to 17.87%. Although health services spending has decreased in the first three quarters of 2020 relative to the same period in 2019, GDP has decreased significantly more in 2020 over 2019, and therefore health care spending likely represents a larger portion of the economy in 2020 than in prior years.
Per capita out-of-pocket expenditures have grown since 1970
as well as in dollar terms, overall health care spending out-of-pocket expenditures
have grown steadily since 1970, averaging $1,240 per capita in 2019, up from
$115 per capita in 1970 (that would be ~$603 in 2019 dollars). Out-of-pocket
medical costs do not include the amount individuals contribute toward health
insurance premiums a massive economic anchor IMHO.
Ø Most
of the recent health care spending growth is in insurance programs, both
private and public. Private insurance expenditures now represent 31.5% of total
health care spending (up from 20.4% in 1970), and public insurance (which
includes Medicare, Medicaid), it represented 41% of overall health spending in
2019 (up from 22% in 1970).
Ø Per
enrollee spending by private insurance grew by 51.3% from 2008 to 2019 significantly
faster than both Medicare and Medicaid spending growth per enrollee (26.2% and
16.4%, respectively). Private insurance pays higher prices for healthcare than
Medicare and Medicaid.
Ø Interestingly
In 2018, U.S. health care costs were $3.69 trillion. That makes
health care one of the country's largest industries. It equals 17.87%
of gross domestic product. In comparison, health care cost $27.2 billion
in 1960, just 5% of GDP.
That translates to an annual health care cost of- $11,172 per person in 2018
versus just $147 per person in 1960. Health care costs have risen far-far faster
than the median annual income.
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