Posted originally on the conservative tree house on July 16, 2021 | Sundance | 64 Comments
Well, well, well…. though financial media will say this is remarkably unexpected, it is something CTH specifically predicted we would see – and it is happening exactly on the timeline CTH anticipated.
The Bureau of Labor Statistics releases the second quarter national wage rate data today {BLS DATA HERE}. U.S. wages DECLINED 1.2% in the second quarter of 2021 compared to last year. When reviewing the data [Table 2], look at the negative impact to women, specifically Black and Asian women:
TOP LINE – Combine a 1.2% decline in earned wages with a 5.4% overall inflation rate recently reported {Go Deep}, and what you get is a 6.6% drop in real income amid the working class. That, my friends, is exactly what we said should be expected. That is also why the JoeBama administration needs to pump more money into the system (human infrastructure spending) in order to stop people from realizing just how bad it is.
You cannot have declining wages and massive inflation and expect the middle-class to survive. Additionally, when I said six weeks ago that we had just passed peak home value, this is another data point to bolster that prediction. We are in a plateau period on macro-level real home values, from this point they start dropping. You cannot have near double digit drops in real income and simultaneously expect people to afford high mortgages. It just doesn’t happen.
The declining wage rates, and the more substantive drop in real wage rates due to massive inflation, are specifically hitting the lower tier of the working class harder. Yet despite this, Biden is intent on importing even more economic migrants to put even more downward pressure on wages for the working class.
These are very real outcomes of policy. Working class Blacks and Latinos will feel this even more, yet this is the special interest group that Democrats claim to support. The reality is exactly opposite from the narrative sold by the Biden administration.
The Democrats know this. These outcomes are not accidental; they are a feature not a flaw in their policy. This is why they need to keep spending to retain the ruse.
There’s no way around this. Despite the pundit and financial class selling a counter-narrative, home prices will crash and unemployment will go up. I know this is directly against the current talking points, but the statistical reality is clear. CTH was the first place who said two months ago that home sales will plummet, that is starting to happen right now. There’s no way for it not to happen, the big picture tells us why.
May 2021 – “It will be very interesting to watch how the housing market responds over the next few months. If the trendline continues we should see a considerable softening in home sales, again depending on region, as the inflation hits the working class.” Imagine what happens when they stop pumping money into the economy.
People may not realize that 90% of all physical trade is moved by container ships. Because of COVID-19, the disruption in the supply chain has created a shortage in containers never seen before. Because companies could not ship their good during the lockdowns, the attempt to catch up has led to a massive shortage of containers. The Suez Canal block only exasperated the crisis.
Some believe a major crisis unfolding in rubber, which some now believe has been deliberately created to reduce global warming by preventing tires from arriving for cars. Rubber is used far beyond just tires. Nevertheless, rubber producers face climate change restrictions, activists who would love to see them shut down completely, a destructive fungus, and then the continued politicization of COVID-19. In Japanese yen terms, the high in rubber took place on an annual closing basis back in 2010 with the intraday high in 2011. We saw a 10-year decline with the historic low forming last year, which ended up creating an outside reversal to the upside. From a long-term perspective, rubber looks to be poised for a broader rally into the years ahead. Short-term, there has been overhead resistance
COMMENT: Marty, it is amazing how you are the only one capable of forecasting this trend years in advance. I have been attending your WEC events since 2011. You have forecast long ago that the deflation would end in 2020 and that this wave would be inflationary with shortages in commodities. If the world simply raised the white flag and ran the economy according to the ECM, all our lives would be far better. I fully understand your desire to have Socrates continue after you. It’s time to go public.
GH
REPLY: The problem has always been that forecasting is just opinion. That is why they try to ignore our forecasts or plagiarize them and pretend they thought this in the shower. The entire global economy was set for shortages to start with. Then these people in government, confronted with the Monetary Crisis Cycle, have taken the dark path to Marxism dangled in front of them by Schwab. They have inspired racial conflict to claim that the people want Marxism to achieve EQUALITY. Schwab puts out this scenario that unrest will get worse because they want his communist solution. It is a brilliant strategy. You create the crisis and then offer the solution.
You then start this defund the police so you can replace local police with federal who will no longer be local as in the Nika Revolt. Then you have Gates buying as much farmland as he can and with political pull, he gets Biden to claim there is a surplus of food (a lie) and he then pays Gates for not growing food while over 20 countries are on the verge of starvation.
Inflation continued to surge in June, with consumer prices accelerating at the fastest pace in almost 13 years. The Labor Department’s Consumer Price Index, which measures a basket of goods and services as well as energy and food costs, jumped 5.4% in June up from last year. That’s higher than May’s 5% year-over-year price rise.
Based upon clients reporting from Italy, much of their crops have had to be destroyed because there is now also a shortage of cans. Indeed, I happen to like V8 juice. None is available in cans anymore – only plastic bottles. End fossil fuels and you kill plastics. California will be forced to reverse its climate change decrees for there is a severe shortage of power and without air conditioning, a lot of elderly will die. They will probably blame some COVID variable.
Posted originally on the conservative tree house on July 13, 2021 | Sundance | 115 Comments
On July 4th, a little more than a week ago, the White House made the preposterous claim that holiday food was cheaper than last year. Everyone who buys groceries knew that level of propaganda was unmitigated nonsense and the consumer pricing data released today shows exactly that.
According to the BLS, June prices jumped 0.9%. Every month this year the CPI has been rising faster than the prior month, which essentially means inflation is rising at an ever-increasing rate. Annualized inflation (June 2020 -vs- June 2021) now shows an overall inflation rate of 5.4%.
However, at a 0.9% monthly rate -if the level stabilizes- that means the real inflation rate is 10.8% Yeah, that’s a serious problem.
The BLS data (see table 7) shows that gasoline has doubled in price year-over-year. Unleaded regular gasoline is now 46.4% higher than last year. That level of fuel price increase is crushing the working class and blue collar workforce.
Inflation overall is currently rising three to four times faster than wages. That means real wages are dropping as Americans are paying more for everything, including fast turn consumable products like food and fuel. Again, we repeat… durable good sales will suffer as disposable income shrinks. Additionally, rising housing prices combined with diminishing blue collar wages is an unsustainable trend.
JoeBama economic policies are crushing the middle-class. The multinational corporations, Wall Street and the investment class benefit as Biden policies directly create a U.S. service driven economy {Go Deep}. Under JoeBama, the wage and wealth gap is growing again after three years of Trump policies closing it. Working class wages are dropping, and investment class earnings rise. This is the intentionally created outcome when America-First policies are cancelled.
Overall energy prices have jumped more than 32% year-over-year. This is a direct outcome of Biden policy. Used vehicle prices are up a whopping 45% vs 2020.
The financial media are working overtime to protect Joe Biden from the outcome of policy by deflecting blame to COVID-19, but the issues are far more substantive than their weak justifications. All of this was predictable. After several months of claiming the inflation was transitory or temporary, now the same financial media are shifting the narrative to say we need to just accept long term inflation is the new normal.
U.S. consumer prices rose 5.4% in June from a year ago, keeping inflation at the highest annual rate in 13 years as the economic recovery gained steam https://t.co/HbP9VXcWMp
The U.S. could be headed for several years of higher inflation than households and investors have seen since the early 1990s, according to economists surveyed by The Wall Street Journal https://t.co/2RIYYPTpsk
I cannot express my frustration adequately as we watch this play out and know how much propaganda is being pushed to justify it. {Go Deep} and {Go Deep}. CTH has outlined for years how these direct economic outcomes are a result of actual government policy.
Everything the Biden administration is doing is making things worse, and now we are seeing big drops in real wages as the inflation rate is far beyond wage growth. Under Biden inflation is massive and wage growth is non-existent. This is an exact reversal of the Trump-era outcome where inflation was low and wage growth rates were high.
You might remember when President Trump initiated tariffs against China (steel, aluminum and more), Southeast Asia (product specific), Europe (steel, aluminum and direct products), Canada (steel, aluminum, lumber and dairy specifics), the financial pundits screamed at the top of their lungs that consumer prices were going to skyrocket. They didn’t. CTH knew they wouldn’t because essentially those trading partners responded in the exact same way the U.S. did decades ago when the import/export dynamic was reversed.
Trump’s massive, and in some instances targeted, import tariffs against China, SE Asia, Canada and the EU not only did not increase prices, the prices of the goods in the U.S. actually dropped. Trump’s policies led the largest deflation in consumer prices in decades. At the same time Trump’s domestic economic policies drove employment and wages higher than any time in the past forty years. With Trump’s policies we were in an era where job growth was strong, wages were rising and consumer prices were falling. The net result was more disposable income for the middle class, more demand for stuff, and ultimately that’s why the U.S. economy was so strong.
♦Going Deep – To retain their position China, the EU responded to U.S. tariffs by devaluing their currency as an offset to higher prices. It started with China because their economy is so dependent on exports to the U.S.
China first started subsidizing the targeted sectors hit by tariffs. However, as the Chinese economy was under pressure they stopped purchasing industrial products from the EU, that slowed the EU economy and made the impact of U.S. tariffs, later targeted in the EU direction, more impactful.
When China (total communist control over their banking system) devalued their currency to avoid Tariff price increase, it had an unusual effect. The cost of all Chinese imports dropped, not just on the tariff goods. Imported stuff from China dropped in price at the same time the U.S. dollar was strong. This meant it took less dollars to import the same amount of Chinese goods; and those goods were at a lower price. As a result ,we were importing deflation…. the exact opposite of what the financial pundits claimed would happen.
In response to a lessening of overall economic activity, the EU then followed the same approach as China. The EU was already facing pressure from the exit of the U.K. from the EU system; so, when the EU central banks started pumping money into their economy and offsetting with subsidies, they essentially devalued the euro. The outcome for U.S. importers was the same as the outcome for U.S-China importers. We began importing deflation from the EU side.
In the middle of this there was a downside for U.S. exporters. With China and the EU devaluing their currency, the value of the dollar increased. This made purchases from the U.S. more expensive. U.S. companies who relied on exports (lots of agricultural industries and raw materials) took a hit from higher export prices. However, and this part is really interesting, it only made those companies more dependent on domestic sales for income. With less being exported there was more product available in the U.S for domestic purchase…. this dynamic led to another predictable outcome, even lower prices for U.S. consumers.
From 2017 through early 2020, U.S. consumer prices were dropping. We were in a rare place where deflation was happening. Combine lower prices with higher wages and you can easily see the strength within the U.S. economy. For the rest of the world this seemed unfair, and indeed they cried foul – especially Canada.
However, this was America First in action. Middle-class Americans were benefiting from a Trump reversal of 40 years of economic policies like those that created the rust belt.
Industries were investing in the U.S. and that provided leverage for Trump’s trade policies to have stronger influence. If you wanted access to this expanding market, those foreign companies needed to put their investment money into the U.S. and create even more U.S. jobs. This was an expanding economic spiral where Trump was creating more and more economic pies. Every sector of the U.S. economy was benefiting more, but the blue-collar working class was gaining the most benefit of all.
♦ REVERSE THIS… and you now understand where we are with inflation. The Joebama economic policies are exactly the reverse. The monetary policy that pumps money into into the U.S. economy via COVID bailouts and federal spending drops the value of the dollar and makes the dependency state worse.
With the FED pumping money into the U.S. system the dollar value plummets. At the same time, JoeBama dropped tariff enforcement to please the Wall Street multinational corporations and banks that funded his campaign. Now, the value of the Chinese and EU currency increases. This means it costs more to import products and that is the primary driver of price increases in consumer goods.
Simultaneously a lower dollar means cheaper exports for the multinationals (Big AG and raw materials). China, SE Asia and even the EU purchase U.S. raw materials at a lower price. That means less raw material in the U.S. which drives up prices for U.S. consumers. It is a perfect storm. Higher costs for imported goods and higher costs for domestic goods (food). Combine this dynamic with massive increases in energy costs from ideological policy and that’s fuel on a fire of inflation.
Annualized inflation is now estimated to be around 8 percent, and it will likely keep increasing. This is terrible for wage earners in the U.S. who are now seeing no wage growth and higher prices. Real wages are decreasing by the fastest rate in decades. We are now in a downward spiral where your paycheck buys less. As a result, consumer middle-class spending contracts. Eventually this means housing prices drop because people cannot afford higher mortgage payments.
Gasoline costs more (+50%), food costs more (+10% at a minimum) and as a result real wages drop; disposable income is lost. Ultimately this is the cause of Stagflation. A stagnant economy and inflation. None of this is caused by COVID-19. All of this is caused by economic policy and monetary policy sold under the guise of COVID-19.
This inflationary period will not stall out until the U.S. economy can recover from the massive amount of federal spending. If the spending continues, the dollar continues to be weak, and as a result the inflationary period continues. It is a spiral that can only be stopped if the policies are reversed…. and the only way to stop these insane policies is to get rid of the Wall Street Democrats and Republicans who are constructing them.
Welcome to our first “Flashback Cartoon” Saturday. Every Saturday we will feature one of Ben’s older cartoons.
Our first cartoon featured is actually the very first political cartoon Ben drew in August of 2009 as he began the long and bumpy road of becoming a political cartoonist.
Interesting this first cartoon was about an AUDIT, isn’t it?
Ben has always supported ending and auditing the Federal Reserve.
It has begun. Wells Fargo has told all its customers that it is shuttering down ALL personal lines of credit. The bank has made it clear that it is shutting down ALL existing personal lines of credit and it will no longer offer such products. That includes revolving credit lines, which typically let users borrow $3,000 to $100,000. The bank used to sell these products as a way to consolidate higher-interest credit card debt or to pay for home renovations. This also included avoiding overdraft fees on linked checking accounts.
Customers have been given a 60-day notice that their accounts will be shut down. Wells Fargo has declined to comment when asked by Reuters. Previously, Wells Fargo suspended home equity loans, claiming it was due to the economic uncertainty with COVID. Wells Fargo has been struggling with a tarnished reputation following a series of consumer financial scandals. In 2016, the Wells Fargo account fraud scandal led to the resignation of CEO John Stumpf and resulted in fines of $185 million by the Consumer Financial Protection Bureau.
Despite the fact that Wells Fargo Bank likes to portray it was formed on March 18, 1852, the truth is that it was simply a freight company back then. It was in New York City where Henry Wells and William G. Fargo joined with several other investors to launch their idea of a freight company to cover the trade between the East and West Coasts. What sparked the idea was the discovery of gold in California in 1849. They recognized that there would be a demand for cross-country shipping. Wells Fargo & Company was formed to take advantage of this great opportunity.
In July 1852, Wells Fargo & Co began its first loads of freight from the East Coast to mining camps scattered throughout northern California. The company contracted with independent stagecoach companies to provide the fastest possible transportation and delivery of gold dust, mail, and other various valuable freight. Wells Fargo began buying gold dust, selling paper bank drafts, and providing loans to help fuel California’s growing economy.
In 1857, the business was so profitable that Wells, Fargo & Co. formed the Overland Mail Company, known as the “Butterfield Line,” which provided regular mail and passenger service. The company earned a reputation as a trustworthy and reliable business. It adopted as its logo the classic stagecoach which became famous even in later movies. Wells Fargo & Co. would also send an employee on horseback to deliver or pick up a message or package which became known as the Pony Express.
There were other competitors. John Bamber first advertised July 12, 1858, as the only authorized for daily and weekly newspapers. On September 9, 1870, Bamber incorporated as “Bamber Express Co.” with four other trustees. Then on January 1, 1874, a change in ownership was announced. On July 6, 1874, it was announced that Whitney & Co. Express had purchased the company.
Wells Fargo & Co. began a merger and acquisition taking over other Pony Express and stagecoach lines. Wells Fargo took over the Overland Mail Company in 1860. Six years later, Holladay Express was added. By this time, Wells Fargo & Co emerged and the leader in transportation in the West. When the transcontinental railroad was completed three years later, the company began using the railroad to transport its freight. In 1905, the company split whereas the freight business stood separately and they embarked on banking. Wells Fargo took over the Nevada National Bank and established new headquarters in San Francisco. By 1910, the freight company was covering 6,000 locations from the Eastern urban centers connecting them to the Midwest farmers and then ranchers and miners from Texas to California as well as the Pacific Northwest where the lumber mills operated.
During World War I, the U.S. government nationalized Wells Fargo’s shipping routes and combined them with the railroads into the American Railway Express. This actually terminated Wells, Fargo & Co. as a transportation and delivery business. The banking side was hit by the 1906 San Francisco Earthquake, but the vaults held up while the building collapsed. After World War II, the Wells Fargo Bank American Trust Company reduced its name to just Wells Fargo Bank in 1962.
Wells Fargo from its split which was decided in 1904, peaked on the 112-year cycle in 2016. While it elected two of the near-term Yearly sell signals, the first long-term resides at $28.80. A year-end closing below that will be the kiss of death for Wells Fargo.
I have explained that we know nothing about who created blockchain, but it allows every transaction to be traced. With a credit card, they can tell if you bought something. With Bitcoin, they can tell I gave you money first, and then you bought something. Central banks are moving to cryptocurrency because this will ensure 100% tax collection. The Bank of England was saying that parents will be able to control what their children spend money on. The problem is that the government will control what we too can spend on. Here is the BIS telling you the reality of the future. They want 100% of all transactions taxed. I suppose the girl next door will have to watch your kids for payment in kind — chocolate bars or clothes.
QUESTION: I believe there is a guy on YouTube ripping you off and claiming Soros is now targeting the dollar which he will destroy just as he did to the pound. Is Soros even capable of that? You said he was just the lead guy on that for the club. Care to comment?
DH
ANSWER: Anyone claiming Soros is now targeting the dollar is absolute garbage. The entire pound issue was that it was a FIXED rate in the European Rate Mechanism. It was a cheap play. If you were wrong, you lost nothing because it was a fixed exchange rate. Soros would NEVER go against a floating currency. He would be wiped off the face of the Earth. This is total nonsense. If this is their sales pitch to buy Bitcoin or something, they could face 20 years in jail. It is totally FALSE advertising — PERIOD!
QUESTION: Why is the Fed doing so much Reverse Repo? Do you think it will hit $2 trillion?
JE
ANSWER: I understand that people seem to be talking up the reverse repo activity as doom and gloom. The Federal Reserve has been raising interest rates and boosted the return to fight inflation. The reverse repo facility takes in cash primarily from money-market funds, as well as government-sponsored companies and banks. This facility offered a return of zero percent to eligible users previously, and then the Fed moved it up to 0.05%, while at the same time lifting another rate, called the interest on excess reserves rate to 0.15% from 0.10%. The Fed is actually competing against the US Treasury in taking in cash, which is diverting it from government debt.
What the Fed does not understand because it is beyond their control are the international capital flows. Raising rates to fight domestic inflation is attracting capital from Europe, where banks are charged negative interest rates if they have excess cash. They open a branch in the USA and then send the excess cash to the state, and then they put it at the Fed. In this manner, the Fed has no idea how much money they are actually attracting globally.
I helped the Japanese lower their trade surplus by simply buying gold in New York, taking delivery, shipping it to London, and then selling it and starting all over again constantly. The trade statistics only measure dollars — not goods. You can buy a hot dog and have it delivered in London, and that too would reduce the trade surplus. It’s all a numbers game, and those in government have no ability to figure out the real world.
The statistics they created with Bretton Woods were all based on the currency which was fixed. So if you created more dollars, that was inflationary. But in a floating exchange rate system, if you create 10% more dollars but the dollar declines by 20%, guess what? It ain’t inflation but deflation!
People’s thinking has been compromised by the very way the government sets up everything. We would allocate trade at our firm according to the flag the company flew. That showed the US never had a trade deficit. It eas US companies setting up offshore and importing their own goods. I testified before Congress on all of this in 1996. So much for trade wars of misguided ideas of the world we live in.
The Fed is raising rates trying to soak up excess cash in the system BECAUSE that cash is not going into long-term bonds. Instead, we see even mortgage rates have declined under 2% because capital is shifting from PUBLIC to PRIVATE. Major capital has been turning to the mortgage market for there they have collateral wherewith government debt they have nothing but a political promise.
Yes, there will be others now claiming this is their idea. But unless you actually made the trades and really consulted with governments to solve problems, you will never come up with the answer without experience. Thank you to all the people who point out those who plagiarize what I write like clockwork. All I can say is that reveals people who are just not trustworthy. So, let’s see how long it takes others to claim they thought this up in the shower.
Posted originally on the conservative tree house on July 2, 2021 | Sundance | 106 Comments
CTH has said repeatedly the road to serfdom is cemented with the catch-phrase “a service driven economy.” The June jobs report from the Bureau of Labor statistics [BLS LINK] highlights the JoeBama economic policy exactly that way.
Approximately 850,000 jobs were gained in June; however, simultaneously the number of long-term unemployed increased by 233,000 to the current state of four million.
While we should expect to see the leisure and hospitality industries as well as education rebounding from the various COVID-19 shutdowns, and indeed they did ( +343,000 and +155,000 respectively), manufacturing was flat (+11,000), and construction was down -7,000. The details inside the data are not as great as the top-line would presume.
CTH looks at alternative data connected to the overall economy; empirical data and sector specific trends inside industry. The biggest domestic issue is inflation, stunningly large increases in prices for fast-turn consumer goods like food and fuel. Inflation is one of the primary reasons we have stated home values and home sales have peaked on a MACRO level despite the massive amount of real estate investment purchasing underway by financial institutions.
When we look at durable good production, we focus on the primary drivers of higher cost middle-class or working class products. Seeing construction jobs decline by 7,000 at the same time real-estate values are increasing only points to the problem of working class not being able to afford new home purchases. In the real estate sector this is unsustainable; it is simply a matter of math, income stability and wages.
The same issue applies within the auto-manufacturing sector. Auto jobs were down -12,000 in June. Automotive manufacturing companies operate their production forecasts on short-term (6 month) and longer term (up to 5 year) analysis. The auto industry gets immediate (in real time) feedback throughout the supply chain, distribution and sales. They modify their employment quickly.
There are now 7,000 less construction workers and 12,000 less auto workers in June than May. This directly aligns with inflation and the substantial decline in real wages.
Additional confirmation of a weak blue-collar jobs situation shows up in work hours. In June “the average workweek for production and nonsupervisory employees on private nonfarm payrolls declined by 0.2 hour to 34.1 hours. (See tables B-2 and B-7.) This is not a sign of a healthy, broad-based expanding economy.
25,000 day-care workers went back to work; that’s good. That reflects the service workers going back to work in leisure, hospitality, hotels, restaurants, bars, venues and other service driven sectors. However, even that gain of 25k is soft when you consider the scale of U.S. unemployment which was unmoved at 5.9%.
The top-line data looks good with 850,000 jobs created, but when you look at the “good jobs“, those jobs with higher blue-collar wage rates, the outlook is a little more concerning. Everyone is paying more for gasoline & food, and that hits the checkbook quickly. It’s not a matter of random statistics, look at the people around you, your family, friends and community…. what do you see?
We hear almost nothing about corporate investment expanding inside the U.S. economy from either foreign or domestic corporations. Wall Street earnings are being enhanced by the return to a ‘service driven economy‘, unfortunately that creates a bigger wealth gap between the working class and the investment class.
I have created this site to help people have fun in the kitchen. I write about enjoying life both in and out of my kitchen. Life is short! Make the most of it and enjoy!
This is a library of News Events not reported by the Main Stream Media documenting & connecting the dots on How the Obama Marxist Liberal agenda is destroying America
Centinel2012 