Free Republic

The math is pretty simple: A lack of purchasing power for consumers has led to a lack of pricing power for companies. When it comes to the U.S. economy big-picture outlook, the ramifications are more complicated, and not particularly pleasant. Wednesday's producer price index reading, showing a monthly decline of 0.5 percent, demonstrates a larger problem: At a time when policymakers are hoping to generate the kind of inflation that would indicate strong growth, the reality is that deflation is looming as the larger threat. Declining prices often would be treated as a net positive by consumers, but income weakness...

WASHINGTON (AP) — There will be no benefit increase next year for millions of Social Security recipients, disabled veterans and federal retirees, the government said Thursday. It's just the third time in 40 years that payments will remain flat. All three times have come since 2010. And there's more bad news. The lack of a benefit increase means that many older people could face higher Medicare costs, an issue that has advocates lobbying Congress. The main reason for no increase next year is low gas prices. By law, the annual cost-of-living adjustment, or COLA, is based on a government measure...

The Universe Never Expands Faster Than the Speed of Light Breaking my radio silence here to get a little nitpick off my chest: the claim that during inflation, the universe “expanded faster than the speed of light.” It’s extraordinarily common, if utterly and hopelessly incorrect. (I just noticed it in this otherwise generally excellent post by Fraser Cain.) A Google search for “inflation superluminal expansion” reveals over 100,000 hits, although happily a few of the first ones are brave attempts to squelch the misconception. I can recommend this nice article by Tamara Davis and Charlie Lineweaver, which tries to address...

AMHERST - Federal Reserve Board Chair Janet Yellen said Thursday that she expects the Fed to raise interest rates later this year and then continue gradual increases thereafter during a University of Massachusetts address that ended with her seeking medical attention. A spokesman for the university said the 69-year-old was fine after being checked out by EMTs and was to continue her schedule which included a faculty dinner at the home of Chancellor Kumble Subbaswamy. A spokesman for the Federal Reserve Board said, "Chair Yellen felt dehydrated at the end of a long speech under bright lights. As a precaution,...

We all remember the promise – President Obama famously told us time and time again that ObamaCare would lower health insurance premiums by $2,500 a year for families. But unless you’re receiving a giant subsidy from the government for your insurance, you’re not paying less in premiums, in fact, for employer sponsored plans, premiums have risen nearly $5,000 since Obama promised to cut them. What about deductibles? They haven’t decreased either. But don’t just take my word for it.A new survey finds that in 2015 deductibles on employer-provided health plans actually rose by almost nine percent.According to a new...

While hardly as dramatic as Bill Gross' last letter in which he urged readers to "go to cash" as a result of the "Frankenstein creation" that ZIRP has created, his latest letter "Saved by Zero" takes a calmer stance and taking a page out of Paul Marshall's FT Op-Ed profiled yesterday, urges central banks to "get off zero" as the "developed world is beginning to run on empty because investments discounted at near zero over the intermediate future cannot provide cash flow or necessary capital gains to pay for past promises in an aging society. And don’t think that...

The declines were greatest for the lowest-paid workers in sectors where hiring has been strong — home health care, food preparation and retailing — even though wages were already below average to begin with in those service industries. “Stagnant wages are a problem for everyone at this point, but the imbalance in the economy has become more pronounced since the recession,” said Irene Tung, a senior policy researcher at the National Employment Law Project and co-author of the study. Jasmin Almodovar, a home health care aide in Cleveland, knows all about that. She has worked for the same health care...

Russian President Vladimir Putin has a new target in the revived cold war with Washington — the U.S. dollar. The website Russia Today* reported Tuesday that Mr. Putin has drafted a bill to block the use of both the American greenback and the euro in trade between the bloc of countries that used to be part of the Soviet Union, including Russia, Armenia, Belarus, Kazakhstan and Tajikistan. The measure “would help expand the use of national currencies in foreign trade payments and financial services and thus create preconditions for greater liquidity of domestic currency markets,” the Kremlin said in a...

Mike BirdAugust 17,2015 There's an image going round that sums up just how ridiculous Venezuela's economy has become. A Reddit user uploaded a picture on Monday of a man using a 2 bolivar note to hold an empanada. According to Venezuela's official bolivar-dollar exchange rate, the man using his money as a napkin is wasting about $0.31 (£0.20). But on the black market, the reality is completely different. You can get 676.88 bolivars to the dollar, according to dolartoday.com. That means holding food with a 2 bolivar note costs the holder less than a third of one US cent.(snip)

Led by a steep slide in energy prices over the last 12 months, prices of a wide range of global raw materials—everything from iron ore to sugar—have been falling lately. That's prompted fears that deflation may worsen a global economic slowdown. But in the U.S., those fears overlook the long-term growth of services, where price trends have been very different. ... Falling prices are usually a sign that demand from companies and consumers is weak and that the economy may be hitting a soft spot. But when the price of services is taken into account, inflation seems less tame than...

Economic conditions in the United States have largely returned to normal and a Federal Reserve decision to raise interest rates should come soon, Atlanta Fed President Dennis Lockhart said on Monday.... "The economy has made great gains and is approaching an acceptable normal ... conditions are no longer extraordinary." He later told journalists he was "very disposed" to a rate increase at the Fed's September policy meeting,

I sure am glad there's no inflation, because these "stable prices" the Federal Reserve keeps jaw-jacking about are putting us in a world of hurt. Those of us outside the inner circles of power are glad there's no inflation, because we'd rather get more for our money (deflation) rather than less for our money (inflation). You know what I mean: the package that once held 16 ounces now only holds 13 ounces. A medication that once cost $79 now costs $79,000. (This is a much slighter exaggeration than you might imagine.) Despite all these widely known examples of rampant inflation,...

LONDON (Reuters) - Americans and Britons bracing for their first interest rate rises in almost a decade are puzzled: why are rates about to go up when there's no inflation? Both the Federal Reserve and Bank of England are proclaiming that they are on the cusp of raising interest rates for the first time in almost a decade. It may take a few months, but the message they are sending still heavily-indebted households either side of the Atlantic is clear: 'be warned'. It's not hard to see why near-zero interest rates should be 'normalized' when you do a quick economic...

New evidence surfaced last week showing that life is getting worse for America’s renters, two news reports said. The Associated Press and Wall Street Journal did a mash-up of two economic reports demonstrating that monthly rents are rising faster than incomes. The online real estate site Zillow.com reported that rents increased 4.3 percent in June from a year earlier in the nation as a whole (and 3 percent in Orange County). That’s double June’s average hourly wage increase of 2 percent reflected in government data, the news outlets reported. “Rents are insanely unaffordable on a historical basis in the United...

Apart­ment rents are up. So are prices for restaurant meals, haircuts, gym memberships and a cup of coffee. For consumers who have become used to flat or even falling prices for years, an unfamiliar sight has emerged in many corners of the economy: Inflation is ticking up.

The deflationists argue that hugely accommodative monetary policy in the U.S., Japan (and nearly everywhere else in the world) has failed to produce real growth. Debt and obligations to social programs such as Medicare and pensions are so massive they can’t be paid. Therefore, according to deflation forecasters, they won’t be. Their predictions of default and accompanying bank failures, bankruptcies, and surging unemployment were bolstered by recent news out of Greece. Falling commodity prices and economic malaise have reemerged. They claim zero interest rate policy and quantitative easing merely delayed the inevitable for a bit. The inflation camp shares the...

We worry about our presidential primary process. Some wonder why. Some believe that we worry too much, and it all fixes itself in time; why get so worked up? Be patient, they say, the primaries will handle it, and then comes the election, don’t worry so much. And if you’re not in an early primary state, you have no effect anyway, so you’re better off saving your energy and just watching TV or going to a game. So we’re told, especially by friends and acquaintances who just don’t think it all matters that much, and who wonder why we’re willing...

Things are not so sweet for the sugar market. Prices have been tumbling and reached a six-year low on Monday on news that Brazil's cane growers are in for a bumper harvest. But while gold made the headlines, the dramatic fall in the sugar price was widely overlooked, despite closing down 4.4pc, compared with a 2.3pc slump in the price of bullion. Over the past year alone, sugar prices have fallen by a quarter. So why has everything turned sour? Bumper Harvest Monday's sharp price drop was driven by signs that Brazil, the world's biggest producer of sugar, is on...

Cosmic Inflation’s Five Great Predictions A “speculative” theory no more; it’s had four of them confirmed. Image credit: Max Tegmark / Scientific American, by Alfred T. Kamajian. “Scientific ideas should be simple, explanatory, predictive. The inflationary multiverse as currently understood appears to have none of those properties.” -Paul Steinhardt, 2014 When we think about the Big Bang, we typically think about the origin of the Universe: the hot, dense, expanding state where everything came from. By noticing and measuring the fact that the Universe is expanding today — that the galaxies are getting farther apart from one another in all directions — we...

Last week I wrote a column on MarketWatch that seems to have stirred quite a bit of debate. Within the column, I was pointing to the potential for a multi-decade rally to be seen in the metals and mining stocks. It seems many of you had very strong feelings that this was simply not possible. Over the next few weeks, I will attempt to address the concerns many of you have presented in your comments to my piece.