Inflation continues on record pace.

TrapperGus wrote:

Jake from State Farm wrote:

Wish I could say the same about propane. It sounds like we're going to get bent over this winter.

We switched from propane to geo-thermal back when propane was about $1 a pound and have never regretted it. It had about a 5 year payback.

Do they still have to dig big huge holes in your backyard for that?

steveschneider wrote:

TrapperGus wrote:

We switched from propane to geo-thermal back when propane was about $1 a pound and have never regretted it.  It had about a 5 year payback.

Was very interested in geo a few years back. I think it would have been 18k loan to get it installed. We pay about 2k a year oil. In the long term I felt like we would have come out way head. Big fear was how would it do on the very cold days and the electric bill.

Thought I saw a question about digging, and yes back 20 years ago they did bring in a moderate excavator and dug down about 10 feet to install the tubing.

Living on a farm it wasn't an issue.

I understand that in limited space they drill down into potable water and run the tubes into that.

It was about 20K to 25K but spending 1K plus a month on propane it has paid for itself, and is greener to boot.

I think I am completely forgetting how much propane costs. - anyway with an 800% plus energy efficiently for geo-thermal electric bills are about $300 a month during the winter verses the 1K plus for propane back in the day...

TrapperGus wrote:

steveschneider wrote:

Was very interested in geo a few years back. I think it would have been 18k loan to get it installed. We pay about 2k a year oil. In the long term I felt like we would have come out way head. Big fear was how would it do on the very cold days and the electric bill.

Thought I saw a question about digging, and yes back 20 years ago they did bring in a moderate excavator and dug down about 10 feet to install the tubing.

Living on a farm it wasn't an issue.

I understand that in limited space they drill down into potable water and run the tubes into that.

It was about 20K to 25K but spending 1K plus a month on propane it has paid for itself, and is greener to boot.

I think I am completely forgetting how much propane costs. - anyway with an 800% plus energy efficiently for geo-thermal electric bills are about $300 a month during the winter verses the 1K plus for propane back in the day...

The drill now is so much more efficient. The company was Dandelion. It would have been a massive change up (taking out our relatively new furnace) and we didn’t know anyone with geothermal so wasn’t sure how well it would work. I’m still very intrigued by it.

steveschneider wrote:

TrapperGus wrote:

Thought I saw a question about digging, and yes back 20 years ago they did bring in a moderate excavator and dug down about 10 feet to install the tubing.

Living on a farm it wasn't an issue.

I understand that in limited space they drill down into potable water and run the tubes into that.

It was about 20K to 25K but spending 1K plus a month on propane it has paid for itself, and is greener to boot.

I think I am completely forgetting how much propane costs. - anyway with an 800% plus energy efficiently for geo-thermal electric bills are about $300 a month during the winter verses the 1K plus for propane back in the day...

The drill now is so much more efficient. The company was Dandelion. It would have been a massive change up (taking out our relatively new furnace) and we didn’t know anyone with geothermal so wasn’t sure how well it would work. I’m still very intrigued by it.

We replaced a duel propane furnace which was about 15 years old, 99% efficient.

As noted it was a 5 year payback...

Geo-therm and wood pellet are the two most popular systems out here.

https://www.axios.com/fed-lays-out-long-awaited-taper-timeline-0013cf76-df3e-4bd1-bab9-5b6ed0f71d02.html

As Q3 earnings season continues down the home stretch, next week's economic calendar may take on further focus, headlined by the development of the October inflation picture, courtesy of the releases of the Consumer Price Index (CPI) and Producer Price Index (PPI).

Will we have another conservative posting misleading claims about inflation this week?

Trolls gonna troll and shills gonna shill

Inflation now at 6.2% - highest in 30 years.

Good work from the Brandon administration.

RQA wrote:Inflation now at 6.2% - highest in 30 years.

Good work from the Brandon administration.

Pretty amazing how it took less than 10 months to do so.

Looking at a first order "why" prices are up, it appears that we and President Biden are victims of successfully reopening the US & global economy, creating high demand, while the producers & suppliers of goods and services are keeping a tight lid on increasing their output.

Fuel prices are especially being controlled by producers not increasing output and the banks refusing to provide the financing for the producers to do so. Since the US is the largest global producer of fossil fuels this is a huge windfall for the owners of those suppliers, but with the banks keeping a lib on new development is not helping anyone else in the economy.

Why are prices from everything from laundry detergent to potato chips to My Little Pony going up? Inflation is a complex phenomenon. Supply chain disruptions, increased labor costs, and surging demand all play a role. But one factor driving inflation is seldom discussed: mega-corporations with massive market power.

In competitive markets, profit margins should approach zero, as long as there are reasonable substitutes available for a given product. But corporate profits as a share of the American economy have risen dramatically over the last two decades, from 5% of GDP to nearly 12%.

As prices have increased in recent months, corporate profits have surged to record highs, according to data from Bloomberg:

Faced with rising prices for everything from lumber to oil to labor and computer chips, chief executive officers have cut costs and boosted prices for their products. The strategy appears to be working, with first-quarter income from S&P 500 companies jumping five times as fast as sales, data compiled by Bloomberg Intelligence show.

As a result, their net margin -- which measures how much profit companies are squeezing from their revenue -- has risen to a record high, according to Bank of America Corp.

...“To a fundamental analyst, inflation is called ‘pricing power,’” said Nicholas Colas, co-founder of DataTrek Research. “And it is very good for incremental corporate earnings.”

As Colas alludes to, corporations are not being forced to raise prices to stay afloat. They are choosing to raise prices to maintain large profit margins because they have enough market power to do so without losing customers.



https://popular.info/p/how-concentrated-corporate-power

TrapperGus wrote:
Fuel prices are especially being controlled by producers not increasing output

Democrat economics at their finest.   The Brandon Administration limits exploration and drilling, closes pipelines, and Trapper then complains about producers not increasing output.  

This one is right up there with your explanation that inflation is really only 0.5% because that's what it was month to month.

According to the US Energy Information Administration, crude oil production in the US fell 8% in 2020, compared to 2019, amounting to the "largest annual decline in the U.S. Energy Information Administration's records."

Who was President in 2020?

edit - anytime you want to have an honest discussion about inflation go right ahead.

As I pointed out, most of it is driven by the anti-trust policy changes enacted during the Reagan administration which has cause major markets to be controlled by small numbers of companies.  Free Markets do not occur when the supply side is controlled by a small number of companies.  People who track this sort of thing for a living are reporting that profits are soaring at major corporations due to their price increases and that those profits are being used by many corporations to continue to buy back their stocks in order to make the stockholders, a majority of whom are in the top 1% and 30% of whom are not US citizens, very wealthy.

TrapperGus wrote:According to the US Energy Information Administration, crude oil production in the US fell 8% in 2020, compared to 2019, amounting to the "largest annual decline in the U.S. Energy Information Administration's records."

Who was President in 2020?

edit - anytime you want to have an honest discussion about inflation go right ahead.

As I pointed out, most of it is driven by the anti-trust policy changes enacted during the Reagan administration which has cause major markets to be controlled by small numbers of companies.  Free Markets do not occur when the supply side is controlled by a small number of companies.  People who track this sort of thing for a living are reporting that profits are soaring at major corporations due to their price increases and that those profits are being used by many corporations to continue to buy back their stocks in order to make the stockholders, a majority of whom are in the top 1% and 30% of whom are not US citizens, very wealthy.

You want to have a discussion with someone calling it the "Brandon Administration". RAQ is just embarrassing himself in a culture war because the last President said it was ok to treat people like garbage that he believes have looked down on him his whole life. Enjoy the talk!

RQA is a thin skinned troll.

No sense in debating a screen name that gets his talking points fed to him like a umaa football beat reporter.

There is a discussion to be had about why prices are increasing, which seems to be centered on the opportunism of large companies raising prices and reaping higher profits.

For gas prices, while the claim is that supplies in the US are tight, the oil refiners in the US are shipping record amounts of gasoline out of the country.

GRR Spartan wrote:RQA is a thin skinned troll.

No sense in debating a screen name that gets his talking points fed to him like a umaa football beat reporter.

Yet here you are debating a screen name. Well at least trying to.

TrapperGus wrote:There is a discussion to be had about why prices are increasing, which seems to be centered on the opportunism of large companies raising prices and reaping higher profits.

For gas prices, while the claim is that supplies in the US are tight, the oil refiners in the US are shipping record amounts of gasoline out of the country.

When you inject 3 trillion into the economy and you have that much money floating around, you can't stop it. You can't turn off the faucet and make inflation stop. You have hyper inflation. And bottle nects and harbors because we have such demand. Now we're going to inject another 1.5 trillion. I mean inflation is caused by money flow. We have a ton of money floating around. This is going to last awhile. Buckle up

DWags wrote:

TrapperGus wrote:There is a discussion to be had about why prices are increasing, which seems to be centered on the opportunism of large companies raising prices and reaping higher profits.

For gas prices, while the claim is that supplies in the US are tight, the oil refiners in the US are shipping record amounts of gasoline out of the country.

When you inject 3 trillion into the economy and you have that much money floating around, you can't stop it.  You can't turn off the faucet and make inflation stop. You have hyper inflation.  And bottle nects and harbors because we have such demand.  Now we're going to inject another 1.5 trillion.  I mean inflation is caused by money flow. We have a ton of money floating around.  This is going to last awhile.   Buckle up

The Trump Tax cuts pushed more money into the economy than that, and we had about 10 Trillion pushed into the economy during Obama, so why no inflation before this?

This looks more like the energy sector is increasing prices, since there are only a few companies in that market and fewer banks which control what they can do, because people have no where else to buy energy.  However, Russia is beginning to pump more natural gas into the EU which is hitting gas prices.

tNYT

Who’s to blame for inflation?
The rising prices of food, gas and other things we buy — in other words, inflation — were already a central economic issue of 2021. Those prices are up 6.2 percent over the last year, and shortages and other inconveniences are side effects of the problem.

Now inflation is also a central political issue. It is dragging down President Biden’s approval ratings and fueling discontent among Americans. It’s clear in surveys. It will surely be the talk at the table of Thanksgiving family gatherings next week (even if, as an economics writer, I might prefer to skip one day of talking about supply chain mechanics).

How did we get here? Who is to blame? To help you understand, today I’ll walk you through the most obvious candidates — and where the evidence looks strongest.

President Biden
Presidents have less control over the economy than headlines might suggest, but the current situation is an exception to the rule. You can draw a direct line from a specific policy decision that Biden and congressional Democrats made this past winter to some of the inflation happening now.

In designing the stimulus that Congress passed in March, Biden’s administration went big, with $1.9 trillion in pandemic relief — on top of a separate $900 billion package that passed three months earlier. Put the two together, and $2.8 trillion in federal money has been coursing through the economy this year while economic activity has trended only a few hundred billion dollars a year short of what mainstream analysts would consider full health.

If you think of inflation as a result of too much money chasing too few goods, then this extra spending is most likely a culprit.

But for all the trillions spent, Americans’ purchases through the end of September were only about $52 billion higher — or 0.4 percent — than would have been expected in a world where the pandemic never happened. I take that as evidence that most of the spending served to replace lost incomes (from people not working, voluntarily or otherwise) or was plowed into savings, and the inflation story is more complicated than just too much money floating around.

The Fed
The nation’s central bank has kept ultra-easy monetary policy in place for far longer than in past economic cycles. Its chair, Jerome Powell, has focused on returning the job market to full health and has projected that the inflation surge is temporary.

His response in large part took from the lessons of the last economic expansion, when the Fed started raising interest rates at the end of 2015 and, with hindsight, might have excessively crimped a recovery that was only starting to show big benefits to workers.

But Powell and other policymakers might be fighting the last war. At a minimum, the Fed has not played its traditional role of pre-empting an inflation surge by deliberately slowing the economy.

That said, monetary policy takes a long time to affect consumer prices, so it’s not a given that the inflation situation would be terribly different now if the Fed had started raising rates already.

Corporate America
When the pandemic shut down the world in 2020, operations managers at companies concluded: We need to do whatever we can to survive.

Automakers saw it as a severe recession and cut back production and orders for new supplies, while car rental companies sold their fleets. Airlines canceled orders for new jets. Energy companies canceled drilling projects. Companies in a range of industries laid off workers.

We’re still dealing with the effects of those decisions. This turned out to be a much shorter economic downturn, with a much speedier recovery, than many people were forecasting in the spring of 2020. So now, automakers are wishing they hadn’t canceled orders for semiconductors, car rental companies are struggling to add vehicles, shipping prices are through the roof, fuel prices are spiking, and companies are wrestling with labor shortages.

What seemed like prudent, sensible decisions turned out to be wrong for the actual economy we ended up with.

Despite all that, however, supplies of many goods actually are higher than they were before the pandemic. The problem is that demand is up even more.

All of us
Though everybody experienced the pandemic differently, in the aggregate a couple things are true.

We shifted our spending toward stuff, rather than services. Americans purchased 18 percent more physical goods — cars, washing machines, furniture — in September than they did in February 2020, while their consumption of services fell a bit. Because demand for such goods is off-the-charts high while supplies are limited, they are more expensive.

And many of us elected to stop working, or work less. (The number of people working remains smaller than it was prepandemic.) The shortage of workers has led employers to offer higher wages to attract employees. That fuels price increases even in services experiencing underwhelming demand, like restaurant meals.

The takeaway
The great shift in Americans’ purchasing and employment patterns prompted by the pandemic look like the primary culprit in this bout of inflation. Decisions by Biden and the Fed likely contributed, and earlier decisions in the corporate world made it harder for supply to adjust to match surging demand.

In assessing blame for the wave of inflation, the biggest question is whether policymakers should have foreseen the problems around reopening — and perhaps been more restrained in trying to stimulate the economy.

That means the future of inflation depends not just on what happens in Washington, but on what happens with the pandemic — and how quickly Americans return to more typical spending patterns and more people go back to work.

Why it matters: Kanter, a favorite among progressives, joins Biden administration antitrust gurus Tim Wu and FTC chair Lina Khan who want to see more aggressive action against monopoly power.

https://www.axios.com/senate-biden-doj-antitrust-chief-kanter-5aa8d04a-e382-4374-a7ed-695e144d9a0e.html

https://apnews.com/article/business-economy-prices-retail-sales-85c933a1ca63498c68111af4b59a006b

If the Biden Administration’s spending policies have been a major factor in driving prices higher—as Republicans claim—you would expect the inflation rate to have jumped a lot further in the United States than in Europe, say. That hasn’t happened. Between January, 2020, and October, 2021, the U.S. inflation rate increased by approximately 4.7 percentage points, and the eurozone’s inflation rate increased by 3.7 points. The U.S. jump is bigger, but the figures are roughly in the same ballpark.

People keep freaking about the price tag as though it would all be spent next year.

It was a 10 year time frame, though some of it has been shortened as the overall amount was shortened.

Per year, even at the 3.5 Trillion, it was 350 Billion per year.  The Pentagon gets almost 800 Billion per year.

edit - the money spent by the Pentagon is only part of the overall money spent on defense, as there are many other departments whose main purpose is defense related, such as the Department of Energy whose main spending is on building and maintaining nuclear weapons.

So it sounds like inflation is going to go down the supply chain issues have been addressed and gas prices should be going down as well.

To my MAGA friends you should be able to sleep better soon.

steveschneider wrote:

TrapperGus wrote:

We switched from propane to geo-thermal back when propane was about $1 a pound and have never regretted it. It had about a 5 year payback.

Was very interested in geo a few years back. I think it would have been 18k loan to get it installed. We pay about 2k a year oil. In the long term I felt like we would have come out way head. Big fear was how would it do on the very cold days and the electric bill.

The sig other tells me my memory sucks ... propane was more like $4.50

We have a 6-ton loop and a farm house with no insolation in the walls and good air transfer if it is windy, which it typically is, aka a drafty situation, when it gets below zero F the system can keep things around 65 at the thermostat. There is the emergency electric heater built in, however we seldom use it. With modern construction and insolation, like our neighbors, who also have geo-thermal have it isn't an issue if the system is properly sized. It likes to keep a steady temperature, rather than trying to increase by 1o degrees after a day at 60 when people are not home.

https://twitter.com/paulkrugman/status/1464301558963781640

Have to admit I was totally wrong on expectation that inflation would fall in 2022.

Energy is such a basic input the economy that even when it falls after a year the ripple through the rest of the economy keeps the prices of other goods rising.

That and now that the wealthy have the expectation that they can raise prices while not losing sales the only fix is a slowdown engineered by the Fed.

The only ray of sunshine in this report is that the last two months taken together the inflation if annualized would be 0.6%

BLS wrote:The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in August on a seasonally adjusted basis after being unchanged in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.3 percent before seasonal adjustment.

https://www.bls.gov/news.release/cpi.nr0.htm

https://www.bls.gov/news.release/ppi.nr0.htm

[tw]1570029913507516416[/tw]

https://www.newyorker.com/news/our-columnists/the-inflation-picture-isnt-as-negative-as-republicans-and-the-markets-are-saying

Trapper Gus wrote:https://www.newyorker.com/news/our-columnists/the-inflation-picture-isnt-as-negative-as-republicans-and-the-markets-are-saying

The news about inflation is good, well at least according to Biden. He says inflation is zero. And to celebrate that fact they held a party just the other day at the WH. That was the day the Dow dropped 1200 because of the news that inflation is zero. Isn't that the narrative Trapper?

CPI increased zero in July & 0.1% in August. That annualized is 0.6%

I read that the stock market plunge all but guarantees that the fed will raise interest rates again and I’m having trouble understanding why the so called smartest people in the room think the solution to high prices is to increase unemployment when corporate profits continue to be at all time highs. It seems really ghoulish to me. The fed needs to back the F off.

Rocinante wrote:I read that the stock market plunge all but guarantees that the fed will raise interest rates again and I’m having trouble understanding why the so called smartest people in the room think the solution to high prices is to increase unemployment when corporate profits continue to be at all time highs. It seems really ghoulish to me. The fed needs to back the F off.

I totally agree, the Fed's tools to control the economy are out of date from what the data shows is happening.

Maybe back in the 1970's, when there were only a few people who had access to all the data at their keyboards the "monetary policy" control championed by Milton Friedman was defendable, but bow we can see that the inflation is occurring because the small number of people in each business sector who are in control of the businesses in that sector are raising the prices not because of shortages, per say, but because of the threat of shortages, at best, or even just because they can with no threat of shortages at all.

Even if there may be shortages that is no excuse for rising prices, which really is just economic blackmail by the middlemen imposed upon the consumers. However, in the present day understanding of economic "fairness" this is considered to be "okay" with tons of academic propaganda to support the logic which enough people agree with that we do not have "riots at the barricades".

CPI from January 2021.

Last two months have been flat, mostly due to falling gas prices, will this ripple through the rest of economy?

Though it looks like "Big Food" is working up excuses not to lower food prices.

https://www.msn.com/en-us/money/markets/food-supply-stays-tight-as-disappointing-u-s-harvest-adds-to-global-challenges/ar-AA122akq?ocid=msedgntp&cvid=90cc27c0474e40e8896bff4731fa69ec

https://www.dailykos.com/stories/2022/9/20/2124076/-Wondering-why-inflation-is-such-a-problem-What-you-aren-t-hearing