Posted by Larry Doyle on June 26th, 2014 8:37 AM |
Anyone with a modicum of ‘sense on cents’ is well aware of the maxim ‘garbage in, garbage out.’
If we are to believe that the inflation data reported by Uncle Sam does not properly capture the true level of price increases in our economy — did somebody say intentionally misleading — then the immediate question begs, what is the real level of economic activity in the nation?
Recall that real GDP is defined as:
A measure of economic growth from one period to another expressed as a percentage and adjusted for inflation (i.e. expressed in real as opposed to nominal terms). The real economic growth rate is a measure of the rate of change that a nation’s gross domestic product (GDP) experiences from one year to another.
If inflation is under reported, and the rate of change in our economic growth is a known figure, then by definition the output (that is, real GDP) will be overstated. So I repeat my question: What is the real level, that is a more honest and accurate assessment, of our 1st quarter GDP? (more…)
Posted by Larry Doyle on October 11th, 2013 7:14 AM |
One of the main arguments made by the Federal Reserve for continuing to run the printing press via its quantitative easing program is the fact that the reported rate of inflation is running below its long term target of 2%.
Based on that reality (real or perceived?), Ben Bernanke has been very comfortable opening the Fed’s QE-hydrant and letting the dollars flow despite the fact that the Fed’s liquidity does not appear to be gaining meaningful traction in the system and actually stimulating true economic growth.
Some might say that things would be far worse without Ben’s liquidity, but first let’s take a harder look at that reported rate of inflation and focus on that qualifier “reported.” To do so, I welcome navigating into a report recently produced by Deutsche Asset & Wealth Management entitled Is The Inflation Threat Hype — or Real? (I thank the regular reader who highlighted this report.) (more…)
Posted by Larry Doyle on March 22nd, 2013 8:04 AM |
I guess we might soon expect Ben Bernanke and his pals at the Federal Reserve to discount the cost of health care from the core rate of inflation. I mean the cost of health care is not truly indicative of what it costs to run a family now, is it?
For those not aware, food and energy costs are not incorporated in determining the core rate of inflation. If the Fed discounted the costs of all goods and services, we might just be able to generate a report that reflects stable prices.
Pardon my sarcastic cynicism, but it is hard to restrain myself upon reading a lead story in this morning’s Wall Street Journal that should be entitled, Health Care Premiums: Bend Over ‘n Brace Yourself. Let’s navigate as the WSJ writes . . . (more…)
Posted by Larry Doyle on March 7th, 2013 5:27 AM |
A picture tells a thousand words, right?
Thank you to Jeff Gundlach and his band of truth tellers at Doubleline Funds for recently highlighting a Bureau of Labor Statistics/Consumer Price Index graph which shows the racket defined as higher education displays that the “thousand” applies not to words but to the rate of inflation within that segment over the past 35 years. The actual number is a mere 1,155%.
Every day we read of how students are increasingly delinquent and defaulting on their student loans. Those realities are no surprise as the Ponzi-style financing promoted to fund higher education feels the effect of students wondering “Where’s the value here?” and “Where’s my bailout?”
There are plenty of the same characteristics within medical care, which has only experienced a 600% rate of inflation during that same time frame.
Thank you Mr. Gundlach and Doubleline.
I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.
Posted by Larry Doyle on April 9th, 2012 6:53 AM |
“Do you feel it?”
“Feel what, LD?”
The hand inside your wallet cleaning you out as you go to fill your tank. I felt it yesterday afternoon when I filled the tank and saw the price for regular gas at $4.35/gallon.
Pissed off? You bet I am. I personally think it is likely to get worse as we approach the summer months. What is driving the price of fuel? (more…)
Posted by Larry Doyle on April 25th, 2011 8:55 AM |
Things could be so much worse.
Try telling that to an individual ravaged by an investment scam, sold out by financial regulators, abused by her bank, and left paying substantially more at the gas pump and checkout line.
If these travesties were not bad enough, how do you think this individual may feel about the lack of real justice meted out against those individuals and organizations which perpetrated obvious scams and abuses? How do you think this individual may vote in upcoming elections? (more…)
Posted by Larry Doyle on April 11th, 2011 2:15 PM |
“LD, how are we going to be able to ‘navigate’ the economic landscape with gas prices headed to $5.00/gallon?”
Great question. Our economic navigating may be relegated to a bike. I will make a point of asking Ben Bernanke and Tim Geithner the next time I see them given that their policies to save the banking system have crushed the dollar and imposed these increasing costs for gasoline, food, and so much more on the American consumer. Congratulations, Ben!! Well done, Tim!!
In all seriousness, our economy will clearly slow given the hidden tax imposed upon it by these skyrocketing gasoline prices.
Posted by Larry Doyle on March 23rd, 2010 1:47 PM |
Inflation is dead, right?
If we believe The Wall Street Journal, all we had to do was read yesterday’s edition to learn this fact. The WSJ wrote, Inflation is Dead? Long Live Long-Term Treasurys:
The Treasury Department is selling $118 billion in debt this week, just as Congress tackled a $940 billion health-care bill over the weekend, shining the spotlight on the U.S.’s hefty fiscal commitments.
Budget-deficit and debt levels are forecast to worsen: Total deficits including interest costs are set to remain above $1 trillion in the next decade, according to Barclays Capital. But longer-dated U.S. government debt is as popular as ever, even at the measly 3.689% and 4.580% yields that 10- and 30-year Treasurys are paying, respectively.
That popularity is supported by a single, compelling economic fact: Inflation is dead.
There you go. The WSJ said it, so it must be right. The policy wonks in Washington continually repeat it, so they must be right, too. Or are they? (more…)
Posted by Larry Doyle on March 13th, 2010 7:13 AM |
President Obama will likely nominate Janet Yellen of the San Francico Fed to replace Donald Kohn as number two in the hieracrchy at the Federal Reserve behind Fed Chair Ben Bernanke.
What can we learn about Ms. Yellen? Let’s read Larry Kudlow, a highly regarded economist and market practitioner with extensive experience on Wall Street, in Washington, and on the airwaves. Kudlow and Yellen look at the economy from a decidedly different perspective. Kudlow recently wrote of Ms. Yellen’s nomination and what it says about the Obama administration in his Kudlow’s Commentary:
Posted by Larry Doyle on January 25th, 2010 8:46 AM |
How are we to judge the Federal Reserve? The Fed by its very nature has been an opaque institution. What truly goes on behind the closed doors of the Fed? What are the relationships amongst the Fed Chair and Fed governors? How about the relationships between Fed representatives and political operatives?
While volumes have been written about the history of the Fed, to the American public the Federal Reserve remains a mystery. How can we lift the veil on this mysterious institution? Let’s “kiss” the Federal Reserve. What? Oh no, LD, where are you going with this? Let’s plant a big “kiss” on the Fed. That is, keep it simple stupid. (more…)