Wednesday, May 12, 2021

It's Jimma Carter 2.0

The news came out today that inflation is up again, month over month, year over year.  The official line is that the Consumer Price Index (CPI) surged ...
The annual CPI figure surged to 4.2%, the most since 2008 though a figure distorted by the comparison to the pandemic-depressed index in April 2020. This phenomenon -- known as the base effect -- will skew the May figure as well, likely muddling the ongoing inflation debate.
Ignoring the reference to the comparison being to the very flat year of the Kung Flu last year, the problem with that 4.2% year over year inflation number is that it's a lie.  If you shop for food you know it's a lie.  In a couple of things I've tracked, I've seen prices up 30% since last year.  Even the numbers we reported last week show much more than a 4.2% rise in most things.  If you have to fill your car once a week to go to work, you know it's a lie.  It's an idea that has been on this blog as long as I've been here.  The officially reported CPI doesn't include food or energy because, "they're too volatile" - as if we can skip buying food or fuel because it's inconvenient.  They're two of the most important costs of living, yet the official numbers don't include them.  

The website Shadowstats has been routinely re-calculating the inflation numbers using the ways they were calculated in the Jimmy Carter years (until 1980) as well as the way inflation was calculated in 1990.  They say the inflation is almost three times that 4.2% value being reported.
Year-to-Year April 2021 ShadowStats Alternate CPI (1980 Base) Inflation jumped to a thirteen-year high of 12.1%, up from 10.4% in March 2021, 9.4% in February 2021 and against 9.1% in January 2021. [emphasis in original - SiG]
Shadowstats has a page with plots of Consumer Inflation based on 1980 and 1990.  You'll note that the inflation rate has stayed in the vicinity of 10% since 2001.  There are some periods where the inflation rate drops as low as 5% (the 2008 'Great Recession') but it has stayed remarkably close to 10%. 

This is all remarkably like the Jimmy Carter era; this week's addition of lines of cars at gas stations, with the stations out of gas or restricting purchases is very reminiscent of the '70s for me. Then we look at the middle East, the emboldenment of Iran, the attacks by Hamas on Jerusalem (paid for with the money Biden sent Iran) and it really resembles the Carter era.  We don't have an embassy in Tehran for them to raid and capture now, so at least we have that going for us. 

Maybe that's what that famous picture was about last week.  Maybe Carter2 was visiting Carter1 for some advice on how to screw up the world more thoroughly.

This is not my picture. But you knew that.


  1. Replies
    1. We will not be getting a Reagan! We are more likely to get a Lenin, Stalin, Hitler, Mao, Kim Il-sung, Pol Pot, Hugo Chávez, or some other recent tyrant.

  2. And the Harris/Biden/Democrat-Party Administration has been able to accomplish what the Carter Administration took 4 years to do in less than 4 months!

  3. Or maybe Ford:

    Because the average person has the power to reduce currency issuance by...not depositing into fractionally reserved banks? Not writing checks?

  4. History repeats. I lived through the 70's and Carter. 2.0 is not encouraging.

    We'll be lucky to end the year with 10% inflation across the board (the CPI will lie) and more likely it will be up at 20%, which means that interest rates will have to rise or 2022 will be 100%.

    1. Agreed, I was there for Carter 1 and the eighties. Once hyper inflation hits it is a terribly hard problem to get under control. The interest rates will be one of the tools used. For anyone stupid enough to have a variable rate mortgage and/or any unpaid credit card debt (any amount carried month after month) then YESTERDAY would be a good day to get the fixed rate and get that credit card float eliminated or be destroyed. Look at the history of interest rates from the 70's and 80's and think about what you will pay for that variable rate mill stone wrapped around your families neck.

    2. My first mortgage was in 1984 at 13% fixed. It was that low because were able to assume the existing mortgage. That was when Paul Volcker was Fed Head and raised the prime rate to 18%.

      I heard that 70% of today's mortgages are in some sort of forbearance. Remember that line about the Great Reset, "you'll own nothing and you'll be happy?" This is the setup. The big banks will own everything. Your not owning anything means you make monthly payments for everything.

    3. I sold my first house to a couple who paid 14%.
      I had to get out of that neighborhood.
      I rented for 2 years.

  5. Naah. Look how many people continued to live for years in their foreclosed houses after 2008. When the conservative rural middle class is no longer able to pay "their" "bills", they won't. But they also won't leave and become Great Depression refugees. Instead their will be a debt jubilee. Anything you occupy or possess, house, car, land, you will fully own; no matter what the mortgage, credit card, zoning, or tax terms formerly were.

    Divemedic, sell your residential rentals now, you're going to lose them. Put the proceeds into junk silver. Plan to pay the tax penalty for not reinvesting sale proceeds in housing next year, which will be less value than you would lose in currency inflation.

    1. I am tempted to refinance my house and buy gold, or silver.
      Then pay back with inflated dollars.

  6. Jimmy Who?

    Only people our age remember the malignant incompetent little jacktard.

    To the baby Ducks who make up over 50% of the country, all news of him, like talk of moon landings, is lumped in together with trench warfare, slave-rowed galleys, and dinosaurs.

    But under GMTA, Peter at BRM noted the actual current inflation rate is probably closer to 14.7%.
    Which reminded me, to, of Jimmy Peanut's regime.

    FWIW, my rent is up 10% this year, and gas is up 33%, for but two examples.

    This is how it begins.

    The ending is likely a great deal more disruptive.