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It’s Wholesale Robbery Of The American People
It’s Wholesale Robbery Of The American People
Authored by Jeffrey Tucker via DailyReckoning.com,
The latest inflation news was glorious,…
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Authored by Jeffrey Tucker via DailyReckoning.com,
The latest inflation news was glorious, they said. The whole media told us so!
It’s easing, improving, better than it has been and headed in the right direction. So stop your kvetching and get out there and make (and spend) money. For that matter, throw around the credit card a bit and stop trying to save money.
Inflation is all but done! It’s pretty interesting because they have been saying this for the better part of 18 months.
In reality, the consumer price index rose 7.1% from a year ago. That’s terrible. Yes, not as terrible as last month, but look at the breakdown in detail.
Food at home is up 10% while food at restaurants is up 12%. Fuel oil is up 65.7 % and transportation services are up 14.2%!
So on it goes, and each month we get a report, and the intensity shifts from one sector to another. The perception that this is cooling is based mostly on the weighting scheme that yields the final number. This is no world in which we are watching the problem gradually disappear.
Wholesale Robbery of the American People
You can see the scale of the problem by looking at the so-called sticky rate of price increases over 14 years. This reveals which part of the overall index is truly embedded and less subject to exigencies of temporary market change.
This is wholesale robbery of the American people. That the thief stole a full place setting of silver last month but this month left the dessert spoon is hardly an improvement and a case for leaving the doors unlocked.
They’ve told us for 18 months that it’s not so bad and we should all stop kvetching about it. But it keeps being bad. The inflation is embedded and clearly has a long way to go before the momentum runs out of steam.
Five Years of This?
This is all having a devastating effect on the budgets of individuals. In fact, we see catastrophe brewing. The personal savings rate is a mere 2.3%. We have never seen anything so terrible in the entire postwar period but this is hardly a surprise. Why save money when it means losing 5%-plus each year?
And couple that with soaring credit card debt with interest rates that are running 20% and higher for typical plans. This is completely unsustainable. Something has to give.
The last time we dealt with such a devaluation was 40 years ago and it lasted fully five years before being tamed. The taming last time required federal funds rates in the double-digit range. We are nowhere close to that.
The idea that people are begging the Fed to stop the tightening lest the whole economy gets tanked is completely ridiculous. If the Fed is serious — and it appears to be for now — it has a very long way to go before the thief stops the steal.
(Which occurs to me: A good trending hashtag against inflation might be #stopthesteal. Just throwing it out there).
How We Got Here
The new age of inflation kicked off in March 2020, when the Fed made the fateful decision to accommodate any and all spending by Congress in the name of virus control. Congress authorized the spending out of debt, the Treasury issued the debt and backed it with the full faith and credit of the U.S. government and the Fed got busy pushing it into its balance sheet, buying it all with newly created money.
Things seemed fine for a while. Indeed, it was better than fine! Checks were flying out of Washington straight into the bank accounts of individuals and businesses. What a world it seemed to be! No work, no productivity and yet real income was soaring. So were savings.
And millions paid off their credit card debt, bought cryptocurrency and kept delivery services operating at maximum amounts and online streaming services saw their profits soar.
Things weren’t so hot for the kids, who had no school, and for millions of businesses forced to close. Workers in industries that could not rely on online magic — there is no app that cuts your hair or does your nails — found themselves bored out of their minds, and turned to food and other substances that added in poundage what many people started calling the “COVID 19.”
Those days also saw the reversal of an attempt by the Fed finally to fix its balance sheet problems dating back from 2008. For 14 years, the Fed kept the federal funds rate running at less than 0% return. That meant a serious punishment to anyone who wanted to save money and set off a mad scramble for return somewhere along the yield curve.
They found it in wildly speculative investments in media and tech, industries that became bloated beyond any plausibly sustainable size.
Profits Without Profits
And with that came a weird feature of the profitable businesses in those days. They were so profitable that they could stop caring about profitability! Instead, corporate America shifted its concern from serving customers and stockholders toward very strange managerial and financial exotica like ESG, DEI and spying and censoring for the federal government. Their idle hands were indeed doing the devil’s work.
There is absolutely a relationship between this extended business boom funded by the Federal Reserve and the rise of woke ideology in the further reaches of the borrowing curve. This is precisely how corporate America turned toward leftist ideology while abandoning its traditional attachment to old-style free enterprise partisanship.
This is how it came to be that the Democrats enjoyed such a vast amount of support from businesses. This proved to be a disaster for American culture and politics.
If you have a look at all the Twitter 1.0 revelations pouring out, you see the essence of the problem. These privileged brats who were running Twitter cared not a whit about profits. Their only interest was in blocking and deboosting based on political ideology in ways that would go undetected.
Liars
And this runs completely counter to the promises made by the CEO and staff under oath. They had sworn in hearings that nothing of the sort was going on. We are finding out now that this was the main thing going on! This is also why Elon Musk was able to fire over 50% of workers and cause the platform to become better than ever before.
Twitter is but one example but it makes the point. A world of easy money is a world without restraint in which every cockamamie ideology can ride high. The Fed was in the process of fixing this problem in 2019 but reversed course under the guise of supporting the pandemic response.
Of course, the only result of that was to prolong lockdowns: When you subsidize something, you get more of it and longer.
The right takeaway: This was all a preventable disaster. No virus and no act of nature robbed you of your money. It was the direct effect of egregious public policy. It began under the leadership of Ben Bernanke, who actually won a Nobel Prize for his efforts.
No End in Sight
The currency regime at the Fed is now being forced into finding a fix but they are a long way from solving the problem. At the end of this, the pandemic response might end up slicing off a quarter or more from every dollar.
The only plus side is watching the puffed-up sectors of Big Tech and Big Media be cut down to size. We’re now in a position of finding out ever more about the outrages that were going on at these companies, and how they all cooperated with the government to end our privacy and speech rights.
Are people angry? If they are not, they should be.
Don’t let the major media troll you. This is a systematic pillaging taking place. I wish I could say that there is an end in sight, but I’m not seeing it yet.
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One city held a mass passport-getting event
A New Orleans congressman organized a way for people to apply for their passports en masse.
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While the number of Americans who do not have a passport has dropped steadily from more than 80% in 1990 to just over 50% now, a lack of knowledge around passport requirements still keeps a significant portion of the population away from international travel.
Over the four years that passed since the start of covid-19, passport offices have also been dealing with significant backlog due to the high numbers of people who were looking to get a passport post-pandemic.
Related: Here is why it is (still) taking forever to get a passport
To deal with these concurrent issues, the U.S. State Department recently held a mass passport-getting event in the city of New Orleans. Called the "Passport Acceptance Event," the gathering was held at a local auditorium and invited residents of Louisiana’s 2nd Congressional District to complete a passport application on-site with the help of staff and government workers.
'Come apply for your passport, no appointment is required'
"Hey #LA02," Rep. Troy A. Carter Sr. (D-LA), whose office co-hosted the event alongside the city of New Orleans, wrote to his followers on Instagram (META) . "My office is providing passport services at our #PassportAcceptance event. Come apply for your passport, no appointment is required."
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The event was held on March 14 from 10 a.m. to 1 p.m. While it was designed for those who are already eligible for U.S. citizenship rather than as a way to help non-citizens with immigration questions, it helped those completing the application for the first time fill out forms and make sure they have the photographs and identity documents they need. The passport offices in New Orleans where one would normally have to bring already-completed forms have also been dealing with lines and would require one to book spots weeks in advance.
These are the countries with the highest-ranking passports in 2024
According to Carter Sr.'s communications team, those who submitted their passport application at the event also received expedited processing of two to three weeks (according to the State Department's website, times for regular processing are currently six to eight weeks).
While Carter Sr.'s office has not released the numbers of people who applied for a passport on March 14, photos from the event show that many took advantage of the opportunity to apply for a passport in a group setting and get expedited processing.
Every couple of months, a new ranking agency puts together a list of the most and least powerful passports in the world based on factors such as visa-free travel and opportunities for cross-border business.
In January, global citizenship and financial advisory firm Arton Capital identified United Arab Emirates as having the most powerful passport in 2024. While the United States topped the list of one such ranking in 2014, worsening relations with a number of countries as well as stricter immigration rules even as other countries have taken strides to create opportunities for investors and digital nomads caused the American passport to slip in recent years.
A UAE passport grants holders visa-free or visa-on-arrival access to 180 of the world’s 198 countries (this calculation includes disputed territories such as Kosovo and Western Sahara) while Americans currently have the same access to 151 countries.
stocks pandemic covid-19 grantsUncategorized
Fast-food chain closes restaurants after Chapter 11 bankruptcy
Several major fast-food chains recently have struggled to keep restaurants open.
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Competition in the fast-food space has been brutal as operators deal with inflation, consumers who are worried about the economy and their jobs and, in recent months, the falling cost of eating at home.
Add in that many fast-food chains took on more debt during the covid pandemic and that labor costs are rising, and you have a perfect storm of problems.
It's a situation where Restaurant Brands International (QSR) has suffered as much as any company.
Related: Wendy's menu drops a fan favorite item, adds something new
Three major Burger King franchise operators filed for bankruptcy in 2023, and the chain saw hundreds of stores close. It also saw multiple Popeyes franchisees move into bankruptcy, with dozens of locations closing.
RBI also stepped in and purchased one of its key franchisees.
"Carrols is the largest Burger King franchisee in the United States today, operating 1,022 Burger King restaurants in 23 states that generated approximately $1.8 billion of system sales during the 12 months ended Sept. 30, 2023," RBI said in a news release. Carrols also owns and operates 60 Popeyes restaurants in six states."
The multichain company made the move after two of its large franchisees, Premier Kings and Meridian, saw multiple locations not purchased when they reached auction after Chapter 11 bankruptcy filings. In that case, RBI bought select locations but allowed others to close.
Image source: Chen Jianli/Xinhua via Getty
Another fast-food chain faces bankruptcy problems
Bojangles may not be as big a name as Burger King or Popeye's, but it's a popular chain with more than 800 restaurants in eight states.
"Bojangles is a Carolina-born restaurant chain specializing in craveable Southern chicken, biscuits and tea made fresh daily from real recipes, and with a friendly smile," the chain says on its website. "Founded in 1977 as a single location in Charlotte, our beloved brand continues to grow nationwide."
Like RBI, Bojangles uses a franchise model, which makes it dependent on the financial health of its operators. The company ultimately saw all its Maryland locations close due to the financial situation of one of its franchisees.
Unlike. RBI, Bojangles is not public — it was taken private by Durational Capital Management LP and Jordan Co. in 2018 — which means the company does not disclose its financial information to the public.
That makes it hard to know whether overall softness for the brand contributed to the chain seeing its five Maryland locations after a Chapter 11 bankruptcy filing.
Bojangles has a messy bankruptcy situation
Even though the locations still appear on the Bojangles website, they have been shuttered since late 2023. The locations were operated by Salim Kakakhail and Yavir Akbar Durranni. The partners operated under a variety of LLCs, including ABS Network, according to local news channel WUSA9.
The station reported that the owners face a state investigation over complaints of wage theft and fraudulent W2s. In November Durranni and ABS Network filed for bankruptcy in New Jersey, WUSA9 reported.
"Not only do former employees say these men owe them money, WUSA9 learned the former owners owe the state, too, and have over $69,000 in back property taxes."
Former employees also say that the restaurant would regularly purchase fried chicken from Popeyes and Safeway when it ran out in their stores, the station reported.
Bojangles sent the station a comment on the situation.
"The franchisee is no longer in the Bojangles system," the company said. "However, it is important to note in your coverage that franchisees are independent business owners who are licensed to operate a brand but have autonomy over many aspects of their business, including hiring employees and payroll responsibilities."
Kakakhail and Durranni did not respond to multiple requests for comment from WUSA9.
bankruptcy pandemicUncategorized
Industrial Production Increased 0.1% in February
From the Fed: Industrial Production and Capacity Utilization
Industrial production edged up 0.1 percent in February after declining 0.5 percent in January. In February, the output of manufacturing rose 0.8 percent and the index for mining climbed 2.2 p…
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Industrial production edged up 0.1 percent in February after declining 0.5 percent in January. In February, the output of manufacturing rose 0.8 percent and the index for mining climbed 2.2 percent. Both gains partly reflected recoveries from weather-related declines in January. The index for utilities fell 7.5 percent in February because of warmer-than-typical temperatures. At 102.3 percent of its 2017 average, total industrial production in February was 0.2 percent below its year-earlier level. Capacity utilization for the industrial sector remained at 78.3 percent in February, a rate that is 1.3 percentage points below its long-run (1972–2023) average.Click on graph for larger image.
emphasis added
This graph shows Capacity Utilization. This series is up from the record low set in April 2020, and above the level in February 2020 (pre-pandemic).
Capacity utilization at 78.3% is 1.3% below the average from 1972 to 2022. This was below consensus expectations.
Note: y-axis doesn't start at zero to better show the change.
The second graph shows industrial production since 1967.Industrial production increased to 102.3. This is above the pre-pandemic level.
Industrial production was above consensus expectations.
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