True inflation is probably double the 9% avg the Feds admit..

that is a shortage, and specific to your industry. This is what happens when a company like Monsanto is allowed a monopoly because they have no competition, you really have no alternatives there, do you?

FYI, I just paid about 60 cents on the dollar to build a couple of new workstations for the office, memory, processors, and especially video cards have plummeted recently, although the shortage in RTX boards had more to do with BitCoin plummeting.

I can build a computer that is 2x as fast and 1/2 the cost as 4 years ago, that is because there IS competition in that market, and innovation and competition have driven prices down. This has everything to do with global trade. When an Agro giant like Monsanto has dominance in their market, they can charge whatever they dang well please. And the fertilizer costs, and this is something you may know more about, likely have more to do with the alleged shortages and price hikes of crude oil. Oil prices directly influence the entire petrochemical market, which also leads to rising food costs, but you would be better at verifying that than I.

Tiggity®

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I really wish this was a dem problem. Heck, I'd be happy if

Jul 14, 2022, 10:05 AM

it was only a pub problem. That means you elect whoever is different and it's fixed. Sad fact is we will never elect anyone who will do what is necessary to fix the problem, just as we will never elect anyone to stop illegal immigration, or end our trade deficit, or balance our budget. We have historically, for decades, elected people who perpetuate the problem.

The inflation will continue, and even forward-looking signs show it's going to get worse. PPI is up 1% on the MONTH for goods. Services are up .8%. PPI is at 15% or so.

The worst factor is wages are rising FAST. Granted, they're a few points behind inflation, but they're keeping pace. Inflation is bad, wages rising to meet inflation is worse. As this is a supply side inflation problem, the solution lies in either increasing supply, and/or decreasing demand. Preferably both. As I don't see China stepping up, or us letting in ten million more illegal immigrants, or unemployment dropping any more than the current 3.5%, the solution lies in reducing demand. That requires a recession. A recession is the only thing that will stop this flavor of inflation. When I am driving around and seeing traffic heavier than before the pandemic, heaviest traffic I've ever seen really, with gas signs showing $4.75 for gas, in SC, that's honestly the scariest part. NORMALLY, that high a gas price would reduce demand, and there would be less traffic. Traffic was low after Katrina for example. Not this time though. That indicates wages are pay are rising with inflation.

But unless the Fed does something drastic, their current approach will not be effective. Expect a full 100 basis point increase in rates next fed meeting. That should put us a bit over 3%. The fed pontificates (incorrectly) that 3.5% rates will be sufficient to curb our 9% and rising inflation. They're dead wrong, and worst part is they know it. They set the 3.5% guestimate based on the fact that's all the interest rate ammo they can use without causing something worse than a recession.

The last time inflation was this high, we had Volcker running the fed, and they jacked rates well north of 10% to stop the inflation. This fed can't do that. Why? Because we have $40 trillion+ in leveraged mortgage backed "securities" issued at interest rates below 5%. Fed lending rate of 10%, and that unwinds quickly. Second, we have $30T in federal debt to service. A 10% fed rate literally bankrupts the federal government. They'd spend more on servicing debt than on any other budget item, and then that means everything else would be added debt, compounding the problem.

And all of this bellies the point that we don't have a clue WHY we have inflation. That's evident from the finger pointing we see. The crux of the problem (worldwide) is a labor shortage. Plain and simple. Some is caused by lockdowns that are largely over. China though is imploding, which doesn't help. Some is just missed work from illness. And some are people who are disabled from illness. And some are dead people who used to work, being the smallest part. But add all that up and you get a general shortage of labor.

Now we don't realize it, and frankly refuse to admit it, but in the United States, for decades now, we have had higher demand than any domestic labor supply could satisfy. We don't like to think about it, but from a labor and supply standpoint, given our demand, we can NOT stand on our own two feet. It sounds good in stump speeches, but it's wholly unrealistic. With a global labor shortage, especially Chinese exports in particular, we lack the cheap foreign labor we've relied on for decades now to supply domestic products at prices lower than they could ever be made domestically. So supply dwindles, demand stays put because we're loaded with money and imaginary assets, but at the end of the day money does not produce a computer chip, or anything else. It is a piece of paper and a promise, and someone works for the piece of paper. A person, expending labor, producing something, somewhere, is what makes the product ultimately. It's not your dollar making the computer chip, it's a guy in Singapore or Taiwan making that chip in exchange for your dollar. It's a Chinese's factory worker getting paid $100 a day working 12 hours a day 6 days a week making iPhones, in exchange for your money, that makes the iPhone. If that guy isn't working, the money doesn't make the phone. Less phones, more expensive, and inflation.

So why the labor shortage? We know about the supply chain issues. Lockdowns killed production, so there were issues. But everyone is wide open now, so why the WORSENING labor shortage? Why is global supply NOT rebounding, even though lockdowns and almost all measures are gone? This is the crux of the problem from this point forward for many, many years.

The virus impacts our two biggest (legislated) deflation mechanisms, global (free) trade, and illegal aliens. Without illegals doing more domestic labor cheaper than Americans could, and without Chinese factories producing domestic goods for the US consumers at costs cheaper than they could ever be made in the US, without those deflators of products and services, we have inflation. Add to that a domestic and global labor shortage, and even our own domestic economy, that normally ran at 99% efficiency, is impacted. If you have a company of 200 people working EXTREMELY efficiently at say 99%, and say 10% have virus, health, whatever issues, 10% less labor, that means the other 90% working at 99% capacity have to work at 110%, and they burn out, and then leave. So efficient economies are crumbling under this new labor scenario.

We have underlying, and frankly uninformed, labor assumptions and demands based on conditions that no longer exist. The system we have all been part of, without realizing it even, functions VERY WELL under assumptions and conditions that no longer apply. The danger has always been there, and always been mitigated by tried and true measures. But those measures actually rely on the American dollar being the world's reserve currency, backed by the military dominance we enjoy and the promise of stability and strength. A dollar is only worth the labor someone is willing to expend for it. In a sweat shop in Guatemala, a factory in China, or a restaurant in Lexington, SC. I personally always thought it would be a world war that would unwind our system, and the global labor system. That surely could do the trick. But I never expected a pandemic to do the same, or perhaps worse. But that is the economic impact of the pandemic. It is every bit as bad, and possibly worse, than even a world war. In a world war, you at least have allies to pick up slack, and an understanding and willingness to sacrifice for it. This just blindsides people.

There are inflation demonstrations, protests, and riots worldwide and they're just starting. Some in places with historic inflation problems, and others in places without historic inflation problems. Ecuador, Panama, Albania, Greece, Kenya, Sudan, Argentina, Ghana, Sri Lanka, the countries with historic inflation, and developing economies, will see the pinch first, but it will trickle up. Even OPEC can not meet its own quotas for production, even WHEN IT WAS LOWER. They raised production quotas a month or so ago, but when they did, they were not even meeting their previous LOWER quotas.

But by all means, point fingers. Blame democrats, republicans, whatever. That's our standard go to plan when confronted with collective, bipartisan irresponsibility. It's the same in many other countries as well. Almost every country, and every form of government, has labor shortages and inflation. And in every country, they will blame their flavor of leader, government, and/or political party. And in some of these countries, with disgruntled people, we had better be very careful. In the current scenario of worldwide inflation and labor shortages, and the resulting uninformed blame that will go with it, there is a historical tendency of leaders to blame other countries, and eventually start wars. It's why I cringe when I see Biden blaming Putin for our lack of computer chips from Taiwan, to make trucks in Detroit. Or whatever else. Blaming Opec for gas prices. China is declining, and they will blame the US as soon as Xi feels the heat. It is what it is, but when leaders are pinched, wars start.