Eternal Vigilance

Is the federal government telling us the truth about inflation? Top investor Jim Rogers doesn’t think so.

His point: While the Fed reports that consumer price inflation is just 2 or 3 percent, consumers can see in their daily lives that prices are rising at a far greater pace.

“I get letters from people all the time saying, ‘Where do these people [who report low inflation] shop?’” said commodities guru Rogers in an interview with NewsMax’s Financial Intelligence Report.

“‘You should see my utility bills, gasoline, education, entertainment, medical - everything is going through the roof. Who are these people kidding?’”

Said Rogers: “The government has been and is lying to us. They do something they call ‘hedonic adjusting.’ Well, I guess you know what hedonism is. They’re showing us a good time.”

Nearly everything - including housing - is going up sharply in price whether or not the government is willing to admit it, insists Rogers, author of the bestseller “Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Markets.”

“The government tells us that the cost of housing is not increasing. They tell us that hotel prices aren’t up. Again, I don’t know who these guys are or where they live.

“Something is wrong. I am confident enough to say that they are lying.”

Slashing the Budget?

November 21,  2005 

Only in Washington DC can a spending increase be called a spending cut– but that’s exactly what happened last week.  Congress passed a budget bill that merely slows the rate at which some federal spending grows by a tiny percentage, and both parties acted as though a revolution had taken place.

Republicans trumpeted the measure as a huge victory for fiscal conservatism, while Democrats were enraged by the supposed “slashing” of government programs.  The uproar shows just how entrenched the spending culture has become on Capitol Hill– even insignificant reductions in the rate of growth in federal spending are seen as earth-shattering.  But if we’re really serious about cutting federal spending, why not simply cut 10% from the 2006 budget? 

Remember, the same Republicans claiming victory for slowing spending next year also passed the Medicare prescription drug bill, which will add over $50 billion to the federal budget in 2006 alone!  In just one year the Medicare bill adds ten times in new spending what the budget bill purportedly cuts.  So nobody who voted for the Medicare drug bill has any business talking about government spending.  Neither do those who refuse to consider cutting one penny from the military and foreign aid budgets.  You cannot conduct a foreign policy based on remaking whole nations using military force and pretend to operate a frugal government.

The Democrats, by contrast, never want to cut spending on anything, no matter how much the federal budget grows– and it’s doubled in 15 years.  A $2.4 trillion federal budget is woefully inadequate in their eyes, and ten years from now they’ll say the same thing about a $5 trillion budget.  No amount of spending will ever satisfy those who believe government should address every human problem and involve itself in every aspect of our lives.

The budget bill fails to address the root of the spending problem–this belief that Congress continually must create new federal programs and agencies.  However, with the federal government’s unfunded liabilities– Social Security, Medicare, and Medicaid– projected to reach as much as $50 trillion by the end of this year, Congress no longer can avoid serious efforts to rein in spending. Instead of a smoke-and-mirrors approach, Congress should begin the journey toward fiscal responsibility by declaring a ten percent reduction in real spending, followed by a renewed commitment to fund only those government functions that are consistent with the Constitution.

We are all idiots, thats how the administration treats us, and if you believe this inflationary cycle is the product of a couple hurricanes, and not profligate borrowing/flooding the economy with trillions of dollars, then I have a bridge to sell you.  Does the administration really think we didn’t know gsa was $2.60/gallon BEFORE BEFORE BEFORE katrina hit?  Do they really think we don’t know natural gas has been in a bull market for 3 years, and not just 3 weeks?  Take into account the gov’t does not include real needs such as housing, tuition, health care, and are trying to even exlude !energy and food! in their inflation numbers.  Even by these minimalist gov’t standards, inflation had it’s biggest monthly jump since the Carter Administration.  The economy is strong!  Iraq is a safer place!  hehe  the inflation numbers caused industrial production and consumer confidence to PLUNGE last month.  The administrations labor department reported friday that inflation jumped by 1.2% in september (over 15% annualy???? oh my god)  these numbers caused industry to contract 1.3%, the biggest monthly drop in 23 years.  The consumer confidence index dropped even further (crashing before our very eyes) to a 13 year low of 75.4.  The media spin that these numbers are affecged by the hurricane makes me want to puke.  How do they explain the plunges in August?  before the hurricanes?  the media is counting that, and I’m afraid they are deadly accurate, that we don’t know these things.  Could you imagine Bushs approval rating below 40% where it stands now, if people actually knew what was happening around them? 

Average weekly earnigns are down 1.2%, the THIRD STRAIGHT MONTHLY DECLINE.  how you blame the hurricanes for THAT ONE?  The Fed would love to stop raising rates right now, but with all this data, they have to choice but to hike even higher and more often.  Sorry if you got ARMS or interest onlies. 

Another great read from gold-eagle.com

- Beyond this, there is perhaps the most powerful reason of all - fiat currency is simply no good in the long run. Theory and history agree that its value only diminishes over time. Its primary weakness is what some Fed governors think is its greatest strength. The printing press analogy, which has been used not only by critics of fiat currency, but also by Federal Reserve Board Governor, Ben Bernanke, who has often stated that “the government can produce as many U.S. dollars as it wishes at essentially no cost.” Yet another shot across the bow for those who still believe inflation is dead.

Inflation

Don’ worry everyone, there is NO inflation…

FOXNews.com - Business - Wholesale Prices Rise 1 Percent