YOU DONT HAVE TO WORRY ABOUT THE RISING COST OF LIVING SO LONG AS YOU DONT EAT
Yes indeed Americas golfer-in-chief has recently left his cycling & fund-raising vacation at his Marthas Vineyard luxurious rented home to temporarily return to Washington so that he can uhm continue to vacation & fund raise this time at the luxurious mansions of wealthy Democratic donors all over America (but especially in Hollywood)
In the meantime though he continues his narcissistic victory laps immodestly proclaiming how he and his White House acolytes have turned around the economy allegedly leading Americans to a new era of enduring prosperity.
Of course there appears to be a muted response to this message especially when the president attempts to hustle millennial audiences at the very few selected colleges (or even high schools) where Americas anointed one still feels free to speak without being driven out of the institution of higher (or lower) learning by constant booing.
Recent leaks from the White House indicate that the president and his chronically mendacious and corrupt consigliore Eric Holder are baffled by this apathetic response.
How could these (millenial) ingrates be so disloyal to the very men (and female uber-mensch Valerie Jarret) who brought them a true minimal unemployment rate of 11; soaring federal state & local taxes; escalating tuition fees (even at state-funded colleges); and the indignity of having to move back into mom & dads basement to survive financially?
BUT WHAT ABOUT ALL THE GOOD THAT BARACK OBAMA RECENTLY TOLD US HES DONE FOR MINORITIES?
And of course most disgraceful of all is the unemployment rate for young blacks … for whom Americas golfer-in-chief proclaimed himself their savior:
For example the unemployment rate of black male teenagers in the city of Chicago is a shocking 92.
Think about it: this means that only about ONE in THIRTEEN Chicago black males aged sixteen to nineteen hold some form of LEGAL EMPLOYMENT even though its usually employment with FEW HOURS & LOW PAY!
AND WHERE DID YOU ACQUIRE SUCH RIGGED ANTI-GOVERNMENT STATISTICS FROM?
The source of these mind-blowing statistics is an official U.S. employment survey: The BLS Labor Force Statistics Current Population Survey (Unadjusted)"
And if you doubt me and youre still a died-hard Democrat apologist please target your Web browser to the following Web link:
http://www.bls.gov/news.release/youth.nr0.htm
ANY NATIONAL STATS?
An equally unsettling statistic released in this same employment survey highlights the similarly dire employment crisis for this demographic NATIONWIDE with 83 of black males aged sixteen to nineteen being unemployed.
In fact there are fewer & fewer jobs for these teenagers to fill as more adults with families often with four-year college degrees seek out teenager jobs" in the food service retail and hospitality sectors of the American economy because of the current absence of jobs in their own traditional fields.
Last year The Bureau of Labor Statistics" reported that the number of COLLEGE GRADUATES working minimum-wage jobs in 2012 was 71 more than in 2002 (before the many job-destroying initiatives of economic-illiterate Obama advisers such as Valerie I never met a rigged economic report I didnt like" Jarrett and David Mr. Greedy" Axelrod).
SO WHATS GOING ON HERE?
The overall problem is dropping incomes for Americas declining middle- and working-class voters.
AND WHY IS THAT?
And why are their incomes declining?
Because the cost of living for most Americans is rising precipitously as a result of the following trends: (1) increasing food & housing costs; (2) rising federal state & municipal taxes; and (3) crony capitalism" meaning that wealthy donors to the Obama administration get tax-advantaged tax breaks from the IRS as well as lax enforcement of illegal offshore financial investments (step up to the plate George Soros).
BUT MOST MEDIA PUNDITS SAY THERE IS NO INFLATION IN THE UNITED STATES
And yes despite what the folks at MSNBC & CNBC are telling you American inflation is a very serious problem.
For example everyones favorite chocolate maker Hershey ($HSY) just raised its prices 8 across the board because of rising sugar & cocoa prices.
Now admittedly it would be a healthier choice for many Americans to eat a less chocolate…
But unfortunately the same global economic forces that drove Hershey to raise its prices impact almost everything we eat.
Inflation is starting to punch us (forgive the pun) right in the stomach!
The Federal Reserve and Wall Street constantly reassure us that inflation is NOT a problem in the U.S. but Hershey says otherwise:
Hersheys management expect significant increases" in ALL their input" costs including ingredients (like milk & cocoa butter) packaging materials (such as paper & aluminum foil) and electric power expenses for the many factories that churn out the companys many chocolate products.
But contrary to the misnomer advanced by the mendacious hustlers on Wall Street & in the White House businesses cant simply burden helpless customers with rising costs so that those businesses can survive the current recession (economic slowdown) created by the bungling Obama administration.
INFLATION IMPACTS BUSINESSES TOO
For example recently the government released its June Producer Price Index" report covering June:
Economists expected a 0.2 increase from May. The data showed wholesale prices jumped 0.4 twice what the experts" had forecasted.
MORE ECONOMIC BAD NEWS?
And considering the current soaring price of ALL commodities (including energy) -- thanks to the growing crises world-wide (Issis beheadings Middle East wars & the capture of Nigerias oil fields by Islamist fanatics) -- its not irrational to expect the next U.S. Producer Price Index" to soar too!
ITS THE DEMOGRAPHICS STUPID!
In the end though its primarily INDIVIDUAL demographics that impact inflation statistics.
Personal inflation ultimately depends on your particular spending patterns:
For example seniors spend more on healthcare; millennials spend more on education; and suburbanites spend more on gasoline (to get to work & to nearby shopping malls).
But the one expense which all North Americans share is FOOD:
Unless youre willing to starve the usual staples bread milk eggs butter fruits vegetables and meat are required for ordinary folks to survive.
And in most grocery stores you pay MORE for all those items than you did a year ago … and a LOT MORE than you did five years ago.
Yet everyone from the Federal Reserve to Wall Street analysts insist that inflation is not a problem.
In fact some economically-illiterate & left-wing Keynesians including a particular reality-challenged New York Times columnist (Paul Klugman) insist that we need more inflation.
LETS GET REAL HERE
But lets face facts here: the reality-challenged elitists who champion these foolish economic policies tend to be in THE TOP INCOME CATEGORY. They dont feel the pain like working families because FOOD & FUEL BILLS EAT UP SO LITTLE OF THEIR USUALLY AMPLE WEALTH.
Another answer is that the headline" inflation numbers routinely omit food & energy costs because those costs can be so volatile and the many fluctuations in these costs could allegedly distort the official government statistics on inflation.
In theory any sustained rise in food and fuel will show up as higher prices for most consumer goods.
And guess what: Hershey just raised wholesale prices.
The theory is now reality!
The next move is up to the distributors who sell Hershey chocolate to your local stores:
When they raise their prices the next victims will be the rest of us!
Of course the crony-capitalist elites of Washington D.C. New York City & Americas Left Coast" dont have to worry about inflation or food prices:
They can afford to live comfortably anywhere (even in such low-tax offshore havens as the Turks & Caicos Islands Aruba & Switzerland).
BAD NEWS SOUPCOFF
And what are the long-term implications of the general rising cost-of-living increases which I have just documented?
Well based on what I have learned about historical stock-market & economic cycles through past research I expect imminent global economic & stock-market crashes of significant proportions which in turn will create even more increases in the cost of living in the United States in particular along with declining incomes AND soaring tax burdens for most citizens.
And based on what did happen historically during previous economic implosions like Im predicting we could possibly expect a rise in anti-government sentiments expressed in extremist movements on the left & the right of the political spectrum.
WILL THE LAST AMERICAN TO FLEE THE COUNTRY PLEASE FLUSH
So there now exists in my mind anyway a crystal-clear clarity about where current dangerous but previously perceived benign" political/economic trends are heading unless there is a change in direction by those who are collectively in command of Americas ship of state (which now increasingly floats on an ocean of DEEP DEBT).
PLEASE STOP … YOURE STRESSING OUT YOUR READERS … AND YOUVE HARDLY BEGUN
Throw in the riots & looting that have accompanied similar past economic disasters like this along with the rise of armed extremist militia groups and/or radical college protest movements and you have: the perfect recipe for social anarchy and a push back" by government through:
(1) Repression of dissenters" via background checks;
(2) Intimidation of these dangerous" elements by the IRS and other justice" agencies;
and
(3) Wholesale expansion of the governments monitoring of suspected domestic opponents".
In other words were talking about a world in which President Richard Nixon of Watergate fame would have felt quite comfortable.
Not to mention President Barack Obamas kitchen cabinet (can you say Eric Holder & Valerie Jarrett boys and girls?)
GLOBAL DOOM & GLOOM
Indeed all my recent investment research has convinced me that global stock markets are going to be metaphorically clobbered as soon as the Fed" is forced to raise interest rates (when the Fed ends monetary easing" as economists call it).
And if recent reports in the Financial Times of London" are correct it could be sooner than later!
Yet many of Americas voters have now been sucked into the Obama administrations intended (socialist) largesse:
Whether its extended unemployment insurance food stamps or free health care more & more Americans are hooked on this metaphorical crack cocaine of government assistance.
Not only that but many of these same citizens who happen to be members of what were once the nations prolific middle class are now been destroyed by a plethora of minor and major tax IRS regulations (& payable regulatory fines).
And all of these measures also hamstring the efforts of most small businesses which operate (and create employment) in the real-world economy and do NOT operate in the algorithmic government statistical world of rigged government reports on economic-growth AND on unemployment statistics.
And its my strong personal opinion (based on prior research) that when the stock market eventually ends its clueless & reality-challenged Obama-like vacation (currently signified by what seem like never-ending soaring share prices) this is when ALL investors in the American stock market will be impacted by the greatest wealth destroying tax of all:
And Im talking about a horrendous unanticipated stock-market crash and then likely fiscal bankruptcy by the current U.S government which is already drowning under the enormous debt created by the reckless over-spending of the Obama administration in the last eight years (as it applied the ultimate corruption of Keynesian economics -- more unfettered government spending).
IN MY OPINION THERE IS SIMPLY NO REASON TO FEEL SECURE ANY LONGER
And yes please dont be lulled into a false sense of security any longer.
There are a number of warning signs that global economic (and political) stability is starting to deteriorate already:
For example the GDP of Europes strongest economy Germany fell significantly in the most recent quarter.
And course various acts of aggression by new competitors for the military supremacy once enjoyed by America have recently broken out all over the globe.
For example we all know about the barbarous acts recently carried out by ISSA (now known as ISA) in the Middle East.
And as Americas community-organizer-in-chief continues to dither & delay in coming up with a strategic plan to battle this increasing militant Islamist challenge the threats to Americas allies in the region and to the American homeland are only likely to INCREASE.
And of course were all now familiar with Vladimir Putins cynical acts of aggression against the Ukraine;
Not to mention increasing challenges to American military might in South East Asia by China.
And of course on the economic front there is the recent outbreak of corporate inversions" by overtaxed corporate behemoths like Burger King finding safe refuge from Democrat tax persecution in Stephen Harpers tax-friendly haven of Canada.
Americas founding fathers" were against all forms of direct taxation by the federal entity and preferred leaving these powers in the hands of the original states" that banded together to form the United States of America".
But now Americans are bedeviled by the oppressive tax tyranny of the IRS and its attempts to bully the not-for-profit" political groups which its Democrat Party masters dont approve of.
And just to refresh your memory does the name Louis Lerner sound familiar?
And what about the nefarious monitoring of the phone calls & Internet chats of ordinary Americans by the NSA to ferret out possible political enemies" of the paranoid Obama White House?
MY DOOM & GLOOM" LITANY IS FINALLY NOW ENDED … BUT WHAT ARE THE IMPLICATIONS FOR INVESTORS?
My apologies for rattling on for so long; but there is a reason for filling this commentary with so many depressing observations:
Just a reminder that my constant warning recently in my Twitter investment posts" (http://stocktwits.com/MurrayS) has been that a massive stock market crash is inevitably coming in the United States.
And thats despite all the great profits currently experienced by todays foolish & reality-denying U.S. stock-market investors -- profits occurring only because of the continued artificial" low-interest-rate policies created by the Fed" (first by Dr. Bernanke and now by Ms. Yellen):
For example at the end of last year the Fed announced it would buy $45 billion month of U.S. Treasury debt.
Not only that but it will also continue buying $40 billion a month of agency mortgage-backed securities (junk bonds" in more familiar parlance).
These purchases will be made with dollars created out of (metaphorical) thin air. And they are expected to balloon the Feds balance sheet to 4 TRILLION DOLLARS five times what it was in 2008 by late autumn.
The important thing about the Feds dollars" is that theyre not real since the Fed is constitutionally enabled to print as much phony-baloney" currency as it wishes.
If were lucky this money-printing initiative will be merely ineffective.
More likely it will bring the sort of catastrophe that you can only get from determined central planning from government entities.
After all with this new stimulus" program in place the Fed will increase Americas monetary base at three times the rate of GDP increases.
That is: for every dollars worth of extra output the Fed will add 3 dollars to its balance sheet and trust me that isnt a good thing.
This is the kind of money printing more typical of the Central Bank of Zimbabwe!
ANY PREDICTIONS REGARDING THE CONSEQUENCES OF SUCH INITIATIVES?
So my cautionary warning: Hold onto your hats & wallets folks because this is going to be one bumpy ride!
And why?
Because in my opinion Fed quantitative easing" will necessarily be just around the corner (perhaps as early as late winter); and thats when the proverbial (pardon the expletive) SH*T hits the fan!.
AND THEN WHAT HAPPENS?
And when Ms. Yellen metaphorically jams on the brake pedal on quantitative easing heres what I think will inevitably happen:
Global stock markets will crash; and HYPER-INFLATION will wipe out the savings of everyone but greedy Obama-allied crony capitalists" like George Soros Valerie Jarrett and the rest of the green-energy gang (who brought you the government-subsidized Solyndra bailout in the U.S.).
Hence thanks to Barack Obama & Harry Reid there will finally be INCOME EQUALITY in America…
But it will be EQUAL impoverishment for ALL Americans except the privileged & spoiled elitists who inflicted this economy policy on the rest of us.
Of course as Ive repeated so often - in so many of my recent investment posts:
There is only one political solution to this current politically-created economic status quo a status quo" that now specifically includes (1) rising costs of living; (2) rising taxes and rising unemployment among Americas disadvantaged youth; and (shockingly) (3) a meager .01 annual GDP growth rate accompanied by repeated TRILLION dollar deficits:
Throw out the Democrats bums who created this economic mess!
After all even a six year old could probably have done better in managing the U.S. economy than Americas economic-challenged" community-organizer-in chief!
MY ADVICE
Black Swan author Nassim Taleb has new book out which gives us a clue as to how to protect our wealth. Its called Antifragile"
As Taleb notes when you subject things that are fragile to a shock they break.
Yet in his words things that are antifragile" actually get stronger.
Regarding the fragile" Taleb particularly expounds on the very human fragility which he calls fools confidence".
Being human these kinds of fools -- suffering from this all-to-common malady -- find causes and effects where there arent any; and this in turn leads them to believe they know things which humans simply cant understand or predict.
Based on my social-research experience I agree; and I submit that the social & economic dynamics that comprise the stuff of human society are simply too interlaced intertwined and unpredictable for mere humans to comprehend (no matter how much smarter and superior those individuals perceive themselves as compared to social inferiors like the rest of us")
Emboldened with what Taleb calls a fools confidence these decision makers" make decisions that ultimately prove disastrous.
Certainly based on the evidence of recent history most of the cures of modern-day economics are destructive and a waste of time.
And why?
Taleb notes that the study of economics is what he calls a quasi epiphenomenology" where things that APPEAR to be scientifically related are linked by a causality that does NOT really exist.
Then based on causal connections that are largely IMAGINARY economists clumsily intervene with their economic cures (and these days its usually misguided recommendations for Kenesyian-style government overspending)
A PLAIN-ENGLISH BACKROUNDER
In fact a main source of todays current economic crisis started in 2007.
And the roots of this economic mess-up lies in the iatrogenics Ivan Illichs nomenclature for describing doctor-created infectious outbreaks in hospitals of economists like Alan Greenspan:
In particular their initiatives ultimately led to massive mortgage forfeitures by gullible mortgage purchasers and (additionally) to widespread bankruptcies by the financial institutions holding those mortgages.
The end result?
A massive economic implosion and a date at bankruptcy court for millions of Americans!
Greenspan didnt know what he was doing. But that didnt stop him from doing it. And now a new well-meaning but just as clueless new team is in control at Americas central bank (the Federal Reserve).
They are making the same basic mistakes believing that they understand cause and effect better than they do … and therefore thinking that they can manipulate the system so that it produces the economic results which they desire.
SO WHAT ABOUT TALBEBS PRESCRIPTION FOR DEALING WITH ALL THIS ANTI-FRAGILITY"?
So what does Taleb recommend for mere mortals like the rest of us to do to combat this mess?
Well using Talebs lingo" its logical to say we should all want investments families & businesses that are antifragile."
For example regarding such anti-fragile actions Taleb asserts that on a personal level we should all strive to raise families that can absorb shocks… that can bounce back after reversals… that can rise to the challenges which the future brings.
NEVER MIND THIS FAMILY STUFF … WHAT ABOUT INVESTMENTS?
In our investments he strongly recommends we also need to watch out for possible fragility".
And in plain English what does this mean?
Well first of all we dont want to own stock shares in companies that have too much debt; they simply wont survive a prolonged stock-market downturn.
And perhaps most important we dont want to bet the farm on the ideas of commission-obsessed stock brokers no matter how foolishly confident they are.
So if you want to be most cautious my advice is to forget filling your portfolio with too many stocks (especially those with too much debt and possibly with unsustainable annual dividends)
Instead in my opinion (and I am opinionated on these matters) the best antifragile" holdings right now are likely GOLD and CASH.
If the crisis is unexpected inflation or worse hyperinflation the price of gold will go up.
If deflation appears on the horizon cash will be king (because the price of everything else you own will likely go down … perhaps even the price of your home).
ANY MORE DETAILED RECOMMENDATIONS?
And finally in more detail here are some of the stock sectors in which I would recommend you slowly start accumulating (buying) shares whenever any significant stock-market price dips occur:
(1) Blue chip gold investments in gold bullion gold ETFs (Exchange Traded Funds) and mining shares.
(2) Silver bullion or platinum and palladium -- and related mining shares and ETFs.
(3) Energy investments in blue chip oil & gas companies.
(4) Food and agriculture investments including farming conglomerates as well as manufacturers & distributors of consumer food products.
(5) And finally you might want to think about investing in debt-free companies which are in the water business perhaps the most neglected natural resource of all (and yet the most essential).
And of course there is a political solution to this made in America" economic crisis:
In the 2014 & 2016 elections Americans should permanently vote out of office all those Democrat Party bums who created this economic mess!
YES AND EVERYBODY KNOWS
And now in honor of all those distanced corrupt Washington dunderheads lets break out in song singing Leonard Cohens classic musical tribute to global corruption Everybody Knows":
Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor the rich get rich
Thats how it goes
Everybody knows
Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died
Everybody talking to their pockets
Everybody wants a box of chocolates
And a long stem rose
Everybody knows
Everybody knows that you love me baby
Everybody knows that you really do
Everybody knows that youve been faithful
Ah give or take a night or two
Everybody knows youve been discreet
But there were so many people you just had to meet
Without your clothes
And everybody knows
Everybody knows everybody knows
Thats how it goes
Everybody knows
Everybody knows everybody knows
Thats how it goes
Everybody knows
And everybody knows that its now or never
Everybody knows that its me or you
And everybody knows that you live forever
Ah when youve done a line or two
Everybody knows the deal is rotten
Old Black Joes still pickin cotton
For your ribbons and bows
And everybody knows
And everybody knows that the Plague is coming
Everybody knows that its moving fast
Everybody knows that the naked man and woman
Are just a shining artifact of the past
Everybody knows the scene is dead
But theres gonna be a meter on your bed
That will disclose
What everybody knows
And everybody knows that youre in trouble
Everybody knows what youve been through
From the bloody cross on top of Calvary
To the beach of Malibu
Everybody knows its coming apart
Take one last look at this Sacred Heart
Before it blows
And everybody knows
Everybody knows everybody knows
Thats how it goes
Everybody knows
Oh everybody knows everybody knows
Thats how it goes
Everybody knows
Everybody knows…
AND HOW ABOUT THE ACTUAL AUDIO RENDITION BY LEONARD COHEN HIMSELF
And if youd like to hear Canadas troubadour of trouble Leonard Cohen sing this cynical song please open the Web link immediately below or cut & paste it into your Web browsers Internet navigation pane:
https://www.youtube.com/watch?v=9F8QM3tjkTE
Nuff said I would think.
Murray Soupcoff was editor and co-author of Good Buy Canada" and author of Canada 1984".
He was a founding member (and senior partner) of Ian Sone & Associates Ltd -- Canadas first independent social-research company specializing in the evaluations of federal provincial & municipal government projects in Canada.
He is also the publisher of the Soupcoff Report" investment newsletter whose distribution is partly subsidized by paid subscriptions from former research clients.
