2007 brought the highest US inflation since 1990, 4.1% with energy costs rising by 17.4 percent this past year while food costs rose by 4.9 percent. Both were the biggest increases since 1990. Gasoline prices were up 29.6 percent, the biggest increase since they soared by 30.1 percent in 1999.

Wages have been consistent, down by .09%, the worst since 2005 at down 1.5%.

Does anyone need a spreadsheet to forecast the effects of ongoing inflation and dropping wages over the next 5-10 years? With consumer debt at record highs, negative US savings and public debt/trade imbalances further diluting USD in a consumer driven economy, what strengths does the US have to reverse what's an obvious deadly trend?

The Associated Press: Inflation Rate Is Worst in 17 Years

The inflation data should be on the Fed's mind when it comes to setting rates this month. Some pundits are suggesting a .50 cut. This will improve the trade imbalance by weakening the dollar but will also further increase the rate of inflation. It's getting to the stage that no matter what Bernanke does, it won't improve the situation.

Data from the eurozone suggests that inflation is more than 1% above target at the same time as production and confidence are falling, again the ECB has little room for manouevre.

The Fed, though, is different than the European Central banks in that in Europe the banks are solely responsible for inflation whereas the Fed's remit extends to the general economy.

Interesting times

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'They'd rather be alive than free, I guess. Poor dumb bastards.' Private Eightball - Full Metal Jacket

The art of war is of vital importance to the State. It is a matter of life and death, a road either to safety or to ruin. Hence it is a subject of inquiry which can on no account be neglected
- Sun Tzu, the Art of War

IMO the US trade imbalance is far beyond a weak US dollar improving it to any significant degree as I don't see any US industry or industries having the potential to increase domestic or global market share due to still high US wages.

With a drop in the Fed rate and no demand for US expansion capital, somebody, the US consumer in particular, is going to bite the bullet in a bad way.

But I thought the economy was soaring?

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When they come a wull staun ma groon
Staun ma groon al nae be afraid
Thoughts awe hame tak awa ma fear
Sweat an bluid hide ma veil awe tears

Depends on who one believes.

If I can't believe the Administration, who can I believe?

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When they come a wull staun ma groon
Staun ma groon al nae be afraid
Thoughts awe hame tak awa ma fear
Sweat an bluid hide ma veil awe tears

There are other belief systems.

Other belief systems?

__________________
When they come a wull staun ma groon
Staun ma groon al nae be afraid
Thoughts awe hame tak awa ma fear
Sweat an bluid hide ma veil awe tears

Believing current administration, based on its track record, requires blind faith. Transfer that to another blind faith belief system.

But that might mean that the current adminstration was wrong!

I'm scared. Hold me.

__________________
When they come a wull staun ma groon
Staun ma groon al nae be afraid
Thoughts awe hame tak awa ma fear
Sweat an bluid hide ma veil awe tears

There isn't IMO any possibility or desire existing to lower U.S.wages. When we moved production to low wage countries we sold out the Middle Class forever.

On the money ! We can't print our way out of this one except if one has significant liquid assets buying at distress sale prices and holding on to what may appreciate as a turnaround takes place can keep one ahead of the game. Too old for that !

shit, should I pack?

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No individual can plan his own existence in their view.

So the state planners must arrogate to themselves the right to manipulate any sector of the economic system if the good of “society” or the “general welfare” is paramount.

Ipso- if the rights of the individual get in the way, the rights of the individual must be sublimated.

The Road to Serfdom
FA Hayek (interpretation)


Mortgage Backed Security survivor

The middle class priced themselves out of the market long ago.

I seriously doubt the young to middle-age have those assets. They'll bear the brunt of past and current fiscal irresponsibility.

Only if you don't have to travel on USD.

Dollar's holding up OK in Argentina, but not many other places.

Shit, there's places that are expecting their bribes in Euro now.

__________________
When they come a wull staun ma groon
Staun ma groon al nae be afraid
Thoughts awe hame tak awa ma fear
Sweat an bluid hide ma veil awe tears