Joe Biden is the Inflation King.

Pass it on. pic.twitter.com/rhDjz66CE5

— Stephen Moore (@StephenMoore) October 17, 2022

Matt Purple says he’s getting “thirty pieces of (inflated) silver.”

I, for one, never thought he would do it. I never thought Joe Manchin, who was elected in West Virginia after running an ad in which he literally shot the 2009 cap-and-trade bill, would sign on to Joe Biden’s Build Back Better climate agenda.

Yet sign on he has. Last night, Manchin announced that after over a year of logjamming Biden’s spending plans, he’d struck a deal. The legislation he agreed to weighs in at a ballpark of $700 billion, a sharp climbdown from the $6 trillion Democrats had initially asked for. But it’s still a lot of money, and even more importantly, it’s a major psychological boost for the left. Now, barring some let-the-world-burn chaos from goth kid Kyrsten Sinema or revolt from House Dems, Build Back Better will be signed into law.

Before we get to the green stuff, let’s pause for a moment and consider the clinical insanity of dumping hundreds of billions into the economy at a time of massive inflation. The Democrats audaciously claim that the package will somehow reduce inflation. They even went back and renamed it the Inflation Reduction Act of 2022, a bit of Orwellian chicanery. They cite the bill’s tax hikes on big corporations as proof it will slice the deficit and help control rising prices.

But then they make similar claims about every spending package and the deficit only ever seems to widen. Irrespective of what you think of the tax hikes — and raising taxes amid recession fears and rising interest rates is a serious gambit — the fact remains that they’re still dumping hundreds of billions of new spending into the economy. Inflation simply means too many dollars chasing too few goods; can anyone seriously argue this won’t exacerbate the problem?

RTWT

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Jeffrey Carter, at Points and Figures, is justifiably outraged.

Finally, Senator Joe Manchin got what he wanted and rolled over. At least, that’s what we are hearing. Hence, a new spending bill will make its way through Congress.

Increases in government spending are INflationary. They don’t take inflation down.

Government has input into the costs of goods and services but it doesn’t set the price. The “scorecard” I saw showed how all of this spending is revenue neutral. That’s always a joke.

Details are sketchy but supposedly:

15% minimum tax on corporations

Eliminating Carried Interest tax rates on Investment

First, raising taxes during a recession is not a good idea. Second, the way to spur GDP growth is to decrease corporate taxes and taxes on investment.

Corporations do not pay taxes, they aggregate them. They pass them along to their customers. If they pay higher rates of tax, they don’t increase salaries for employees nor do they invest in property, plants, and equipment.

Interestingly, Democrats want Biden to stop sending refined oil products overseas to try and decrease gas prices in the US. You’d think that would work because it would increase the available indigenous supply. Except, there is not enough storage for those products so it would all be wasted.

This bill kills an incentive for any company to invest in storage facilities to make the Democratic scheme work.

One of the smart things Reagan did to kill the inflation beast was to cut taxes on investment. For those that don’t know, carried interest is the money that people receive when they successfully operate private equity, real estate, hedge, or venture fund. If you are a general partner at one of those funds and cover the costs of operating the fund, 20% of what’s left of the profits accrue to you.

There are various tax codes for different funds. But, you generally pay the long-term capital gains rate on gains. That’s a big incentive to invest.

Democrats just crushed the incentive.

RTWT

In Joe Biden’s America we price chicken wings like king crab legs pic.twitter.com/ExpXwLaizy

— Josh Culling (@jmculling) January 14, 2022

NY Times

Of course, not only can they surreptitiously mulct your savings, if you are a conspicuous opponent of the Regime, they can freeze your account completely and leave you penniless.

Oldest College Daily:

The Yale College term bill will increase by 3.8 percent, from $69,430 to $72,100, for the 2019–20 academic year, the University announced last Monday.

Tuition will rise from $53,430 to $55,500, and the cost of on-campus room and board will jump from $16,000 to $16,600. Over the past two decades, the term bill has increased at a rate similar to this year’s. According to the press release announcing the change, the level of the student effort — the amount of money students on financial aid are expected to contribute to their education — will remain constant for the fourth straight year.

“Although the cost of a Yale education changes each year, students receiving financial aid can rest assured that their Yale financial aid award will continue to meet their full demonstrated financial need,” said Director of Undergraduate Financial Aid Scott Wallace-Juedes.

For the 2000–01 academic year, at $32,880, Yale’s term bill was 55 percent lower in absolute terms than that of the coming school year, though inflation has accounted for the bulk of the difference. Tuition as well as room and board have been consistently increasing by roughly 4 percent annually since then, even through the 2008 financial crisis, which slashed the University’s endowment by 25 percent. Yale has said that it increases tuition and room and board to keep pace with inflation and University expenses.

Obscene, outrageous, absolutely appalling. But the top elite schools have a natural monopoly as gatekeepers to the International Ruling Class and every year more people are lining up trying to get in.

Yale cost $3000 a year when I was a freshman back in 1966.

“Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless.”

— Milton Friedman

Hat tip to This Isn’t Happiness via Ratak Monodosico.

Hat tip to Vanderleun.

Americans are not getting the economic benefit of the tremendous currency expansion in the form of more available credit, but never fear! We are going to get something very real as the result of the Obama Administration’s currency management efforts: Inflation.

Rico explains:

While the career politicians prance about in their clownshoes and red rubber noses quacking about “the fiscal cliff” and are obediently parroted by the MSM and FTV charlatans, this is something they do NOT want to talk about or want anyone to even ‘think’ about.

This is actually very simple. Look at the two lines on this chart.

– The blue line reflects the falling purchasing power of the Dollar. From the creation of the FED when one Dollar was worth one Dollar to today, when one Dollar is really only ‘worth’ 3.8 cents.*

– The red line represents rising prices over time. This is the inflation the professional liars say does not exist.

– The turning point is pretty clearly indicated in the 1970’s. This is one trend that is NOT your friend!

It has been said before, but is worth repeating:

– It isn’t that the value (price) of Gold has gone UP. It has not. It is the value (purchasing power) of paper fiat that has gone DOWN.

*The Treasury will begin removing pennies and nickels from circulation in 2013. Pennies stopped being made of copper about 1984 and have been made of zinc with a copper ‘wash’ and are truly worthless in both nominal and real terms by now. Nickels still amazingly contain nickel, and are worth about seven nominal cents due to their metal content. Even the venerable Dollar bill, the greenback, is being ‘looked’ at for extinction by the 40# brains in government who dimly ‘sense’ something is wrong (well, a nominal Dollar is worth 3.8 cents in real terms anyway). Does this suggest to anyone…Bueller? Bueller? …that a currency reset/revaluation looms?

Money velocity has recently declined far below any point during the Great Depression of the 1930s.

Tyler Durden argues that the real state of the US economy, measured by velocity of money, is today far worse than it was during the Great Depression, and federal monetary easing is a disastrous policy certain to produce the same result very shortly in the United States that it did in Weimar Germany.

Velocity of money is the frequency with which a unit of money is spent on new goods and services. It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or sales of men’s underwear (which Greenspan was fond of ogling). In a healthy economy, the same dollar is collected as payment and subsequently spent many times over. In a depression, the velocity of money goes catatonic. Velocity of money is calculated by simply dividing GDP by a given money supply. This VoM chart [above] using monetary base should end any discussion of what ”this” is and whether or not anybody should be using the word “recovery” with a straight face.

In just four short years, our “enlightened” policy-makers have slowed money velocity to depths never seen in the Great Depression. Hard to believe, but the guy who made a career out of Monday-morning quarterbacking the Great Depression has already proven himself a bigger idiot than all of his predecessors (and in less than half the time!!). During the Great Depression, monetary base was expanded in response to slowing economic activity, in other words it was reactive (here’s a graph) . They waited until the forest was ablaze before breaking out the hoses, and for that they’ve been rightly criticized. Our “proactive” Fed elected to hose down a forest that wasn’t actually on fire, with gasoline, and the results speak for themselves. With the IMF recently lowering its 2012 US GDP growth forecast to 2%, while the monetary base is expanding at about a 5% clip, know that velocity of money is grinding lower every time you breathe.

The Fed’s refusal to recognize the importance of velocity of money quickly goes from idiotic to insidious. Here’s a question: If I give you 50¢ and as a result of that transaction, you owe me $1.00, what interest rate have I charged you? Obviously, I’ve charged you 100% interest. ….

In 2011, every dollar of GDP growth created $2.08 in debt. In real life, that’s 108% interest plus the nominal rate, and our twisted leaders want you say, “Thank you sir, may I have another!”

2011 wasn’t an anomaly either; it’s the new normal.

Read the whole thing.

Hat tip to the News Junkie.

Inflation is almost as old as the modern Olympic Games (revived in 1896). Boing Boing informs us that the Olympic Gold Medals we are watching being awarded are only gold-plated, and that Olympic Gold Medals have not really been made of gold since a century ago.

The amount of gold in an Olympic gold medal has fallen to 1.34 percent, thanks to gold prices that recently peaked at $1,895 an ounce. At current prices, a pure 400g medal would cost about $25,000 to make, with a total bill of about $50m for the games.

“The last time the Olympic Games handed out solid gold medals was a hundred years ago at the 1912 Summer Games in Stockholm, Sweden,” writes gold brokers Dillon Gage. “Gold medals were in fact only gold for eight years. …

The 2012 gold is 92.5 percent silver, 1.34 percent gold, and 6.16 copper, with IOC rules specifying that it must contain 550 grams of high-quality silver and 6 grams of gold. The resulting medallion is worth about $500. For the silver medal, the gold is replaced with more copper, for a $260 bill of materials.

The bronze medal is 97 percent copper, 2.5 percent zinc and 0.5 percent tin. Valued at about $3, you might be able to trade one for a bag of chips in Olympic park if you skip the fish.

(click on image for larger version)

Andy Laperriere explains that the federal government’s cheap money/low interest policies have very real costs, including the long term reduction of economic growth.

During the past three years, the Federal Reserve has tripled the size of its balance sheet—in effect printing $2 trillion—something it had never done in its nearly 100-year history. The Fed has lowered short-term interest rates to zero and signaled that it will keep them at that level for years. Inflation-adjusted short-term rates, or real rates, have been in the minus 2% range during the past couple of years for the first time since the 1970s.

The unfortunate fact is, as Milton Friedman famously observed, there is no free lunch. After the Fed’s loose monetary policy helped spur the boom-bust in housing, it’s remarkable how little attention has been devoted to exploring the costs of Fed policy.

A few critics of quantitative easing (QE) and the zero interest rate (ZIRP) have correctly pointed out that these policies weaken the dollar and thereby reduce the purchasing power of American paychecks. They increase the risk of future inflation, obscure the true cost of the unsustainable fiscal policy the federal government is running, and transfer wealth from savers to debtors.

But QE and ZIRP also reduce long-term economic growth by punishing savers, reducing saving and investment over the long run. They encourage the misallocation of resources that at a minimum is preventing the natural rebalancing of our economy and could sow the seeds of another painful boom-bust.

One intended effect of a loose monetary policy is a weaker dollar, which can help gross domestic product by boosting exports. But a weaker dollar also raises import prices (such as oil prices) for American consumers. For the average American family, this adverse impact has likely outweighed any positive impact from QE and ZIRP.