Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Inflation Watch: $245,000 to Raise a Child in United States

Economics / Inflation Aug 20, 2014 - 10:17 AM GMT

By: EconMatters

Economics

Welcome to Middle-Income Family American Style

Yesterday the USDA`s annual report laid out another 2% increase in the cost to raise a child in the United States, and this only includes the costs associated with the age of 18, which any modern family realizes doesn`t include college, and the fact that many kids either live at home, or require financial help long after the age of 18.


So just as it has become a modern necessity for many Americans to have both parents working, unlike the 1950s era where one parent could support an entire family, not only do both parents have to work to afford the increased costs of modern living, but most Americans based upon these figures cannot rationally afford to have kids!

Fed doing God`s Work Raising Prices

So the Federal Reserve can think they are doing God`s work by trying to raise inflation in the economy, a measure that we have said under-reports the real inflation in the economy due to constant ‘reporting measure adjustments’ but every year it costs more and more to raise a child these days, regardless of recession or not, real prices never drop in the overall economy.

Inevitable Mismatch

This is just another example of the failure of print and expect wages to keep up with inflation Federal Reserve policy, the methodology is flawed, wages will never keep up with inflation, if inflation is artificially manipulated by the Central Bank, because it doesn`t reflect the market forces in the economy, which will always reflect the wages side of the equation, resulting in the mismatch that we have had in this area for such a long time that it has become a discernable trend in society.

Inflation Levels Should Reflect Economic Conditions

Inflation should actually have been negative during the recession and the financial crisis, prices should have reflected the slowdown in the economy for many years, but the Federal Reserve in all their wisdom printed like paper was going out of style, and caused prices to go up on average at a 2% clip, even during an economic slowdown with high unemployment. How the hell are wages ever going to keep up with inflation if one measure is manipulated by the Federal Reserve through artificial means, and the other measure reflects the actual economic conditions of a financial slowdown?

Read More >>> How Fed's Low Rate and Wall Street Yield Trade Hurt The Economy

Logical Policy Flaw

This is the crucial point that central bankers of today, and the question that ultra-dovish central bankers like Janet Yellen and Ben Bernanke fail to answer, it is the biggest flaw in their entire economic methodology, and what they believe in from an economic theory standpoint! Wages can never keep up with inflation unless both parts of the equation are a true reflection of actual market forces, and the up and down variances of the natural business cycle.

Read More >>> The Fed Needs to Raise Rates Now! 

Do Prices stay constant once there is ‘substantial Spike’ in Wages?

So the Federal Reserve wants wages to keep up with the rate of inflation, and they cannot raise interest rates, i.e., more cheap stimulus which raises inflation even more, until they see a ‘substantial spike’ in wages? What does the Fed think will happen to prices if wages do substantially spike? Do they think inflation will stay constant, and wages will increase, and the gap will narrow? What will happen is that once wages spike substantially, then prices will spike even more, so in relative terms wages will never narrow the gap between wages and inflation, if anything it will widen! This has been proven by the last 35 years of central bank economics in the United States. This isn’t some theoretical economic white paper, we have actual real world evidence of cause and effect regarding failed central bank policy.

Read More >>> The Bond Market Explained for Mohamed El-Erian

Get the Stimulus Equation Balanced if Goal is to have Wages Keep Pace with Inflation

If Janet Yellen really wants wages to keep up with inflation, that is fine I am all aboard, but then you need to change central bank policy, instead of asset purchases meant to juice up markets and inflation, take this same money and start sending out stipend checks to workers and consumers, or at least take half the stimulus, so $2.25 Trillion and send this out in the form of “Keep Up With Inflation Checks” to workers to balance out the artificial inflation component which would then come down to around $2.25 Trillion of asset purchases under my revised plan, that is if the Fed really cares about wages truly keeping up with the rise in inflation each year!

Either Complete Propaganda or A and Not A Invalid Argument

The Federal Reserve just isn`t very logical in what they are saying on one hand, and their actual policy decisions on the other hand. It seems before my lifetime ends it is going to cost over $1 million by the USDA`s measure to raise a child, but yeah there is no inflation in the economy, yeah I am sure employers are going to subsidize this cost in the future, this is the fallacy of consistent artificially, government mandated inflation to monetize the debt by the Federal Reserve, overall it lowers the ‘quality’ of standard of living in the United States for the middle class everything else being equal.

Only the Wealthy Retire at 55 these days!

The main reason is that it is not reflective of actual market forces in the economy, and consistent artificially manipulated inflation, which is bad enough on its own without government intervention, makes it more and more difficult for middle class Americans to afford their own home, and raise three kids these days without sacrificing something along the way, like the kids actually being supervised by family, and not being farmed out to outsourced daycare.

When Fed does worry about Inflation, due to ‘under-selling’ basically end of world scenario!

Good thing the Federal Reserve isn`t worried about inflation pressures in the economy, another 2% rise is just noise, but I will now know when the Fed is worried about inflation, that it is an extreme epidemic and take extreme measures in the financial markets for Armageddon, because the Fed`s Disney World just ended! Moreover, it is obvious that when the Fed does start worrying about inflation, not only is it too late, but it is 1970s too late!

By EconMatters

http://www.econmatters.com/

The theory of quantum mechanics and Einstein’s theory of relativity (E=mc2) have taught us that matter (yin) and energy (yang) are inter-related and interdependent. This interconnectness of all things is the essense of the concept “yin-yang”, and Einstein’s fundamental equation: matter equals energy. The same theories may be applied to equities and commodity markets.

All things within the markets and macro-economy undergo constant change and transformation, and everything is interconnected. That’s why here at Economic Forecasts & Opinions, we focus on identifying the fundamental theories of cause and effect in the markets to help you achieve a great continuum of portfolio yin-yang equilibrium.

That's why, with a team of analysts, we at EconMatters focus on identifying the fundamental theories of cause and effect in the financial markets that matters to your portfolio.

© 2014 Copyright EconMatters - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

EconMatters Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in