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What’s Really Going On With Inflation?

The media keep telling me that inflation is moderating, yet the 4 bags of groceries we bought at SuperTarget today cost $189. What’s going on with inflation??

I’m not the world’s savviest investor, but I’ve done all right. I’ve always looked to the 10 Year Treasury Yield as a decent indicator of what is expected with inflation over the longer term. As you can see above, it ‘s jumped substantially over the last 12 months … from about 3% to 4.7%.

That’s a massive jump and could wreak catastrophic havoc on many retirement plans. Traditional pensions rarely have COLA adjustments and the purchasing power of cash holdings will dry up quickly at that rate of inflation.

Worse yet, what might the Federal Reserve do to reign in inflation? Remember when the Fed cranked up interest rates and pulled the whole country into a deep recession in the early 1980s? That was the last time we’ve seen this level of inflation.

To what do you attribute the run-up,in Treasury yields? Do you think it is a reasonable indicator of future inflation?

Image: MarketWatch

6 thoughts on “What’s Really Going On With Inflation?”

  1. The government has been playing games with CPI for decades. This allows them to grab more of our income in taxes because tax brackets have not been adjusted to offset inflation. It also allow them to short sheet Social Security Beneficiaries.

    My wife and I watched Dan Ball’s news cast last night, and the theme was inflation. Here is a Tik Tok video where a gent compared prices in his local Costco from a year ago to today’s prices. His comparison shows prices going up 75%, not7%. Since last years 8.6% Social Security raise, government has found a way to adjust their gaming of the inflation number to keep this year’s adjustment lower.

    @sidemoneytom

    Prices compared to one year ago are up at a minimum 50% on all products at my local grocery stores and Costco #inflation #prices #costco #2023 #fyp #expensive #groceryshopping

    ♬ original sound – SideMoneyTom

    Matt Gaetz was also on the program and he explained why he took the unpopular position of getting Kevin McCarthy booted as Speaker. Mr. Gaetz sounded like an Accountant going through the run-up of Federal Debt since Kevin McCarthy has been Speaker. He also cited the Congressional Budget and Impoundment Act in 1974, which has not been followed since 1996. This law basically requires Congress to pass budgets as portions in stand alone areas to stop package deals that allow Congress to hide rubbish spending in the midst of necessary spending. Instead, Congress has been passing Continuing Resolutions, where they can claim they are keeping government open and paying soldiers, while avoiding truly cutting wasteful spending.

    I would like to end by writing that the government cannot keep spending more than they bring in. We have had decades of politicians from both parties who are bankrupting our country.

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    1. Agree – I was going to include a chart of published CPI, but I thought, “why bother? I don’t think they are accurate.”

      My wife bought two of those same items in the TikTok video last night. Chicken broth & Hellman’s mayonnaise!

      Gaetz is right that they have been playing budget tricks for years. The question is whether or not firing the Speaker changes anything. I’m guessing the Reps want the Speaker to play tricks so that they don’t have to take tough votes and can get re-elected. We’ll see with who’s next.

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      1. My wife has made me keep an exotic inflation hedge. I wanted to payoff my mortgage and she said, “If someone is stupid enough to loan you money at 2.65% for 30 years fixed rate, then you need to keep it as an inflation hedge. You can always drop by the bank and pay it off later with the change that you have left over from your wheelbarrow full of cash that you need to take to the grocery store.”

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      2. She is absolutely right. I paid mine off and regularly think of the extra house I could have bought by keeping more $$$ in the market over the last 12+ years.

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  2. In addition to prices keep going up, I noticed not many good sales at my local grocery store like there used to be. Now I analyze what I am buying more. I cut back or cut out things and use less. I could afford it, but its the principle of it.

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    1. Yes – offering less discounts is another way to raise prices. Based on your experience, how much do you think prices have really gone up?

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