Reflection On Traveling Mid-2021: Inflation is Real

We are finishing our first vacation post-COVID. We traveled to Winter Park, CO where our family owns a timeshare. We traveled by car and spent one night in a hotel. Here are some real examples of inflation as we traveled:

• Gasoline is expensive. In Winter Park, the average price-per-gallon was $3.79.

• Hotel rooms are expensive. We stayed at a La Quinta Inn in North Platte, NE, and the room cost $130 for the night. In years past, this hotel would cost less than $100 per night.

• Food is expensive. Whether eating at a fast-food restaurant, a dine-in restaurant, or buying food at a grocery store, everything is expensive. For our family with six adults and one child, the average meal would cost $150. Keep in mind this is not fine dining. This could be at a sit-down restaurant where burgers, fries, salads, and some entrees filled out the menu. The average cost of a hamburger with fries is $15 ($10 for a "meal" in a fast-food restaurant).

Conclusion: inflation is real. Based on the average increase in travel cost, prices seem on average to be 30 percent higher than when we made this trip two years ago.

How Much is a Trillion Dollars?

by Charles H. Coppes

As you probably know, or can't fathom, the House (HR3326) and Senate (60-40), on pure party lines, raised our "debt ceiling" to $14.3 Trillion Bucks (to accommodate the jobless recovery and progressive welfare state for 2010). 

As I often say on radio, a trillion seconds would take 30,000 years.  Sure we could print $100 bills and shorten the astronomical figure to 3,000 years.  But it is still fiscal insanity.  The best thing that came off Gutenberg's press in 1455 was the Holy Bible, but the Devil had other ideas.  So let's consider the following visual for a trillion bucks. 

What does that look like? I mean, these various numbers are tossed around like so many doggie treats, so I thought I'd take Google Sketchup out for a test drive and try to get a sense of what exactly a trillion dollars looks like.

We'll start with a $100 dollar bill. Currently the largest U.S. denomination in general circulation. Most everyone has seen them, slightly fewer have owned them. Guaranteed to make friends wherever they go.

A packet of one hundred $100 bills is less than 1/2" thick and contains $10,000. Fits in your pocket easily and is more than enough for week or two of shamefully decadent fun.

Believe it or not, this next little pile is $1 million dollars (100 packets of $10,000). You could stuff that into a grocery bag and walk around with it.

While a measly $1 million looked a little unimpressive, $100 million is a little more respectable. It fits neatly on a standard pallet...

And $1 BILLION dollars... now we're really getting somewhere...

Next we'll look at ONE TRILLION dollars. This is that number we've been hearing so much about. What is a trillion dollars? Well, it's a million million. It's a thousand billion. It's a one followed by 12 zeros. (i.e. 1,000,000,000,000) …

Notice those pallets are double stacked.
...and remember those are $100 bills.

So the next time you hear someone toss around the phrase "trillion dollars"... that's what they're talking about.

__________________

Charles H. Coppes is the author of America’s Financial Reckoning Day. Learn more at www.chuckcoppes.com.

2010: "The Year of Severe Economic Contraction"

by Mike Whitney | December 15, 2009 | Global Research 

Upbeat reports in the financial media, belie the effects of the ongoing credit contraction. Massive injections of central bank liquidity have prevented the collapse of financial markets, but have done little to ease the deleveraging of households or stimulate activity the broader economy. The crisis has stripped $13 trillion in equity from working families who now find their access to credit either cut off or severely curtailed by the same banks that received hefty taxpayer-funded bailouts. The fiscal strangulation of the millions of people who are no longer considered "creditworthy" is progressively weakening demand and spreading pessimism across all income levels. Growing public desperation was the focus of a special weekend report by Bloomberg News:

"Americans have grown gloomier about both the economy and the nation’s direction over the past three months even as the U.S. shows signs of moving from recession to recovery. Almost half the people now feel less financially secure than when President Barack Obama took office in January, a Bloomberg National Poll shows.

The economy is the country’s top concern, with persistently high unemployment the greatest threat the public sees. Eight of 10 Americans rate joblessness a high risk to the economy in the next two years, outranking the federal budget deficit, which is cited by 7 of 10. An increase in taxes is named as a high risk by almost 6 of 10.

Fewer than 1 in 3 Americans think the economy will improve in the next six months....Only 32 percent of poll respondents believe the country is headed in the right direction, down from 40 percent who said so in September." (Bloomberg)

The near-delirious optimism that followed the 2008 presidential election has fizzled in less than 12 months. While the policies of the Obama administration have improved Wall Street's prospects for record profits and lavish bonuses, ordinary working people continue to fight to keep their jobs and maintain their standard of living. Recent data show that household debt which surged during the boom years is being pared back at a historic pace. Household debt to disposable income has plummeted from 136 percent to 122 percent in a little more than a year, leaving many families with little to spend at the malls or shopping centers.

Severe retrenchment has triggered a shift towards personal thriftiness which is reducing economic activity and strengthening deflationary pressures. 2010 is likely to be even worse, as mushrooming foreclosures and commercial real estate defaults force banks to slash lending accelerating the rate of decline. This is from Bloomberg:

"Foreclosure filings in the U.S. will reach a record for the second consecutive year with 3.9 million notices sent to homeowners in default, RealtyTrac Inc. said. This year’s filings will surpass 2008’s total of 3.2 million as record unemployment and price erosion batter the housing market...

Foreclosure filings exceeded 300,000 for the ninth straight month in November, RealtyTrac said today. A weak labor market and tight credit are "formidable headwinds" for the economy, Federal Reserve Chairman Ben S. Bernanke said in a Dec. 7 speech in Washington. The 7.2 million jobs lost since the recession began in December 2007 are the most of any postwar economic slump, Labor Department data show. Unemployment, at 10 percent last month, won’t peak until the first quarter, Quigley said." (Bloomberg)

The Obama administration's $787 billion stimulus pushed GDP into positive territory for the first time in more than a year, but the maximum impact has already been felt. President Obama--under advice from his chief advisors-- has shifted his focus from soaring unemployment to long-term deficits. Additional stimulus will be no more than $200 billion, of which, a mere $50 billion will go towards jobs initiatives. At the same time, Fed chair Ben Bernanke will terminate the quantitative easing (QE) program which kept long-term interest rates low while providing financing for the housing market. When the program ends, rates will rise, housing prices will tumble, and liquidity will drain from the system. The end of QE coupled with dwindling stimulus ensures that economy will slide back into recession in the 2nd or 3rd Quarter of 2010.

Policymakers have decided to create conditions that are favorable to financial sector consolidation and the further privatization of public assets. The economy is being strangled by design.

Here's economist Mark Thoma explaining why consumption will not return to pre-crisis levels:

"For the immediate future and likely for much longer than that, slow consumption growth is expected. One way that could change is if the government implements a successful jobs program or uses some other means to increase household income (e.g. a payroll tax cut), and households spend rather than save the extra income..., but the political environment makes a jobs program or further fiscal policy action highly unlikely.

Similarly...the Fed is anxious to unwind its massive policy intervention, not extend it, so monetary policy is unlikely to help much either. Since monetary and fiscal policy authorities are unwilling to provide further help, slow growth is the best outcome we’re likely to get." ("Will Consumption Growth Return to Its Pre-Recession Level?" Mark Thoma, moneywatch.com)

Along with flagging consumption, economists Antonio Fatas and Ilian Mihov show why both investment and employment will not rebound in the way that many bullish analysts expect. By tracking the rate of recovery in the last 5 recessions, the two economists show that demand will remain flat for a prolonged period of time, precipitating a "jobless" and "investmentless" recovery. Their research supports additional stimulus to reduce the output gap and engage the labor force in productive activity. The administration's policies are the exact opposite of the majority of professional economists who believe that deficits need to increase to effect overcapacity and underutilization. Obama is deliberately steering the economy into a double-dip recession.

While financial institutions have been propped up with zero-rates, myriad lending facilities and boatloads of Fed liquidity, the real economy continues to on a downward path. As households rebalance accounts and increase savings, the signs of distress are becoming more apparent. In Europe, the ECB and IMF have begun to use the financial crisis to wrest control of the budgets of deficits-plagued nations to apply business-friendly austerity measures. The economic meltdown--that was generated by overleveraged banks trading dodgy investment paper--is now being used to assert corporate/bank control over sovereign nations. Greece, Ireland, Iceland, Ukraine, Latvia, Lithuania, Portugal and Spain are all presently in the crosshairs of neoliberal restructuring. Surely, the same policies will be applied within the United States under the guidance of supply-side economist and chief advisor to the president, Lawrence Summers. Thus, in 2010, economic contraction will continue to force state and local governments to lay off millions of more workers while public assets and services are made available at firesale prices to private industry.
Debt deflation and deleveraging will continue into 2011, while foreclosures, personal bankruptcies and defaults continue to mount. The public's frustration with ineffective government policies, is likely to change from pessimism to rage on short notice. The prospect of social unrest or sporadic incidents of violence can no longer be excluded.

Mike Whitney is a frequent contributor to Global Research. Global Research Articles by Mike Whitney

Frontline: The Warning

Robert Rubin, Alan Greenspan, Lawrence Summers

"We didn't truly know the dangers of the market, because it was a dark market," says Brooksley Born, the head of an obscure federal regulatory agency -- the Commodity Futures Trading Commission [CFTC] -- who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country's key economic powerbrokers to take actions that could have helped avert the crisis. "They were totally opposed to it," Born says. "That puzzled me. What was it that was in this market that had to be hidden?"

In The Warning, veteran FRONTLINE producer Michael Kirk unearths the hidden history of the nation's worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.

"I didn't know Brooksley Born," says former SEC Chairman Arthur Levitt, a member of President Clinton's powerful Working Group on Financial Markets. "I was told that she was irascible, difficult, stubborn, unreasonable." Levitt explains how the other principals of the Working Group -- former Fed Chairman Alan Greenspan and former Treasury Secretary Robert Rubin -- convinced him that Born's attempt to regulate the risky derivatives market could lead to financial turmoil, a conclusion he now believes was "clearly a mistake."

Born's battle behind closed doors was epic, Kirk finds. The members of the President's Working Group vehemently opposed regulation -- especially when proposed by a Washington outsider like Born.

"I walk into Brooksley's office one day; the blood has drained from her face," says Michael Greenberger, a former top official at the CFTC who worked closely with Born. "She's hanging up the telephone; she says to me: 'That was [former Assistant Treasury Secretary] Larry Summers. He says, "You're going to cause the worst financial crisis since the end of World War II."... [He says he has] 13 bankers in his office who informed him of this. Stop, right away. No more.'"

Greenspan, Rubin and Summers ultimately prevailed on Congress to stop Born and limit future regulation of derivatives. "Born faced a formidable struggle pushing for regulation at a time when the stock market was booming," Kirk says. "Alan Greenspan was the maestro, and both parties in Washington were united in a belief that the markets would take care of themselves."

Now, with many of the same men who shut down Born in key positions in the Obama administration, The Warning reveals the complicated politics that led to this crisis and what it may say about current attempts to prevent the next one.

"It'll happen again if we don't take the appropriate steps," Born warns. "There will be significant financial downturns and disasters attributed to this regulatory gap over and over until we learn from experience."

Watch the program on Frontline’s website.

Great Depression Remix

by Robert Morley | From the Nov/Dec 2009 Trumpet Print Edition »

The lyrics are different in 2009 than 1929—but it’s still the same song.

The 1929 financial crash unfolded in just such a way as to inflict punishment. Every time stock investors thought it was safe to get back in the dance, they just lost more money. Every time consumers thought it was safe to start spending again, the job scene hit another low note. Businesses couldn’t hold a tune—they went bankrupt by the thousands.

Eight decades later, the question facing the world is this: Is the worst really over, or is it just the opening note of a very familiar hymn?

History repeats itself. Even if the lyrics are not exactly the same, this verse certainly rhymes with the first. Unfortunately, most people don’t know history.

Whistle a Happy Tune

Ask the average guy on the street. He is almost sure to tell you he has heard or read that the crisis is over.

The New York Times trumpeted: “Fed Chief Says Recession Is Very Likely Over” (September 15). Newsweek’s Daniel Gross confirmed: “I’m prepared to declare that the recession is really, most probably over” (July 14). Bloomberg and Forbes are whistling their own happy tunes proclaiming the end of the recession too.

The good times are back. Stocks will keep going up until 2010, said money manager John Dorfman. “On balance … I think the evidence favors continued gains.”

Sadly, it is all too familiar.

In 1930, the average person was singing that the worst was over too, as were many of the so-called experts.

“Green Lights Ahead,” cheered National Bank of the Republic (Chicago) Chairman G. Woodruff. “The red lights, through which our people last year drove, have changed” (Aug. 5, 1930).

Actually, the worst was only beginning.

Sucker Rallies

From 1921 to 1929, the Dow Jones hummed from 60 to a high note of almost 400! The Great Crash of 1929 changed that. It swallowed 48 percent of stock market value in just a few days. But over the ensuing months, the market bounced back, reclaiming around half of its losses. Investors breathed a collective sigh of relief, and money managers loaded up the stocks again.

Then the stock market abruptly crashed again, sending both share prices and bankers into funeral dirges.

Over the next three years, the market would “sucker rally” a total of five times—only to plunge to new lows on each occasion. Yet with each new rally, the professionals invariably belted out that the crisis was over.

On Aug. 23, 1930, Moody’s Investors Service wrote regarding its prosperity index: “We are, therefore, inclined to regard the present level of business activity as the approximate level from which recovery will begin” (emphasis mine).

And the market plunged.

On Nov. 15, 1930, the Harvard Economic Review predicted: “We are now near the end of the declining phase of the Depression.”

And the market plunged again.

It would take more than three years of ups followed by dramatic downs before the Dow Jones would hit a real bottom—all the way back to around 50.

For the general economy, it took a decade of hopeful high notes and octave-dropping lows and finally a literal worldwide bloodbath to end the Depression.

Here is the point. Whether you look at the stock market, world industrial output or trade, the tune matches 1930. By some measures, things are even more discordant.

The Next Stanza

By March of this year, the Dow Jones Industrial Average had crashed by 53 percent from its highs. The corresponding fall in 1929 was 48 percent. The Dow has now subsequently rallied by 50 percent—just as it did 79 years ago. Where to next?

The stock market’s lengthy slump has ended at last, says popular Goldman Sachs soothsayer Abby Joseph Cohen. “We do think that the new bull market has begun.”

“There is little evidence to be cautious,” composed Citigroup strategist Tobias Levkovich.

Can you hear the pickup note to the next stanza? And the market plunged again.

Yet the stock market is not the only indicator that is in hurtful harmony with 1930.

According to the most recent data presented by VoxEU.org, an economic policy research center, world industrial production is also in uneasy unison with the 1930s fall. A look at the charts reveals a déjà vu nightmare chorus. Both the United States and Canada have seen their industrial production fall parallel to the 1929 crisis, as have Germany and Britain. Italy and France and Japan are doing much worse.

In the area of trade, our world is also worse off than that of our predecessors. Trade levels have fallen off a cliff. There are, however, some major differences between now and the first Great Depression.

In 1930 America was a producer. During that year, the U.S. produced 70 percent of the world’s oil, 60 percent of its wheat and cotton, 50 percent of copper, 40 percent of coal. Additionally, America held half of the world’s monetary gold reserves. Today, America is a net consumer, relying on other nations for energy supplies and strategic minerals such as oil and copper to meet demand.

America also used to be a creditor nation. But it has gone from being the world’s greatest lender nation to its greatest debtor—a situation that is getting worse by the day. America is spending money like it is going out of style. It has paid out more money combating the current recession than it has on any other event in history, including World War ii.

All the money might buy a little time—it might make the faux recovery last a bit longer—but it doesn’t really change anything. A problem caused by too much spending and debt cannot be fixed by more of the same.

Unfortunately, America looks like it is getting set up for a refrain. The excesses of the past two-plus decades have not been rectified during the past few short months. More punishment is on the way.

History is repeating; you can feel the rhythm. The crescendo awaits.