Tuesday, April 13, 2010

No Inflation? Do You Really Believe the Government or FED?


I hope not. Thanks to the politicians heading our government the spin doctors have gotten so good at twisting information and stretching the story, that it is almost impossible to tell the truth from the lies. Then there is the ideology influence meaning both sides of an issue give absolutely opposite analysis and supposed truth about every issue.

For every subject there are both sides. Democrats and Republicans, the House versus the Senate, liberals versus conservatives. president versus congress, working class versus the elite, intellectuals versus Tea Party members, well you see what I'm saying.

But that is not the end of the confusion. For on top of all that, there are so many special interests, again on both sides, that we are also bombarded by them. All this is a rather long segue into the story I am writing which concerns government credibility.

Take inflation. For the last several years we have been repeatedly told by the government and the media, surrogate mouthpiece for the government, that our inflation rate is practically non-existent. But these past few years of extremely low interest rates resulting from very low inflation rates don't seem to have reduced credit card interest, bank fees, the price of gasoline or even the cost of everything else.

Maybe I just don't understand. I mean how could inflation be insignificant if health care costs are rising by anywhere from 16-33% a year depending on who you listened to. Even Obama says the cost of health insurance premiums were up by 40% this year? Those claims were why we now have health care reform.

Actually Obama and the Democrats in Congress said there would be no increase in insurance premiums, no increase in medical costs, no increase in taxes yet they said it would cost about a trillion dollars to implement. If we are saving a trillion dollars by cutting Medicare and Medicaid and eliminating all that fraud, then why does it still cost a trillion dollars? Shouldn't the cost be paid from the savings? Of course the increases in fees and taxes start right away, while major changes don't take effect until 2013, the first year after Obama is re-elected if he is re-elected.

Another thing about our lack of inflation. Why is it the same banks charging us 20% interest on credit cards get the money for free from our Federal Reserve? Right now banks can borrow from the Fed at 0% to one-quarter of one percent. We pay 20%, they pay nothing and they get their money from us?

As near as I can figure, a bank can borrow money at no interest from our government, then charge the people who pay for the government, namely us, 20% on the money we spend, meaning the bank can make a 20% gross profit on money they borrow from the government if they do nothing but process credit card transactions. No wonder no one's making loans, that car and home sales are miserable.

But that is still not my only beef with inflation reported by the government. Gasoline is way up the past few years yet consumption is down and per capita use is way down. Still makes no sense unless it is a scam to keep the big banks in business.

I do a lot of shopping, and prices keep going up. The alternative to prices going up is to shrink the size of packaging which everyone seems to have done. Keep the price the same, reduce the amount of food they get. Now that sure sounds inflationary to me but not to the government bean counters.

Finally there is the Wal-Mart approach to being successful when the economy sucks. Just force a reduction in the cost of goods, this is a big advantage for Wal-Mart with the buying power of about 8,400 stores. Wal-Mart demands such low prices from suppliers because they sell more stuff than anyone else. Of course this sends the jobs overseas because American companies cannot cut prices anymore. And it reduces the quality of products because "Made in America" labeling is no longer true.

The quality of the products gets reduced in order for even foreign suppliers to get a Wal-Mart contract. I noticed how cheap materials have become commonplace, or how thin packaging is getting. What I buy breaks down faster, like scouring pads that are shot after one or two good pot scrubs. Ten or twenty years ago they cleaned many pots and pans. My laundry detergent says it does x2 or x3 the loads yet I get half the loads from what I got ten years ago.

So Wal-Mart can save me money but only if I give up American jobs and American quality control and accept inferior materials and much shorter product life. Now selling that should have required a great spin job but it didn't. Americans flock to Wal-Mart, jobs flock overseas and quality sinks even lower. This is the bill of goods we are being sold by the spin doctors.

I think inflation is going up a lot faster than reported by the government and media. As I just explained, there are a lot of ways to hide the cost of inflation and none of them do much to help the consumer. What pennies the Wal-Mart way saves us in groceries and goods, we pay in increased interest and fees on our bank and credit cards.

So why write this article? Because if the economy is still being built on a house of cards then more of the house of cards may still collapse. Oh yes, and about that Wall Street manipulation that nearly destroyed the world economy two years ago, the one Obama promised to fix, not even the new and highly spun Financial Reform program Obama wants will fix those problems.

The crucial rules will remain the same and the same crooks are handling the money. Maybe one day our president and congress will take care of us instead of all their more special interests. That is as good as I can spin this story right now.


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