Economic Insights: Markets, Investing, Gold, and Inflation – Part 174

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            <p><a href="https://economicprism.com/i-owe-my-soul/"><img decoding="async" class="alignleft wp-image-887 size-full" title="I Owe My Soul" src="https://economicprism.com/wp-content/uploads/2011/12/Inflation.jpg" alt="" width="150" height="150"/></a>**I Owe My Soul**<br/>By Jeff Thomas, <a onclick="javascript:pageTracker._trackPageview('/outgoing/www.caseyresearch.com/go/v8reb-2/DEX');" href="http://www.caseyresearch.com/go/v8reb-2/DEX" target="_blank">International Man </a></p>
            <p>In 1946, American singer Merle Travis released a poignant song titled “Sixteen Tons.” The lyrics recount the hardships of a coal miner living in a small town in Kentucky, a place where the mine dictated the entire community's economic fate.</p>
            <p>The mining company owned a “company store,” monopolizing all essential goods and setting prices that effectively consumed the miner's entire paycheck. Consequently, miners became virtually enslaved to the mining company. The song's refrain encapsulates this plight:</p>
            <p>You load sixteen tons, what do you get<br/>Another day older and deeper in debt<br/>Saint Peter, don’t you call me ‘cause I can’t go<br/>I owe my soul to the company store <a href="https://economicprism.com/i-owe-my-soul/#more-3526" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
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            <p><a href="https://economicprism.com/the-paradox-of-fed-credit/"><img decoding="async" class="alignleft wp-image-1679 size-full" title="The Paradox of Fed Credit" src="https://economicprism.com/wp-content/uploads/2012/06/SanFrancisco.jpg" alt="" width="150" height="150"/></a>Last Tuesday, the Bureau of Labor Statistics reported that the Consumer Price Index had <a onclick="javascript:pageTracker._trackPageview('/outgoing/www.bls.gov/news.release/archives/cpi_06172014.htm');" href="http://www.bls.gov/news.release/archives/cpi_06172014.htm" target="_blank">increased by 0.4 percent in May</a> and 2.1 percent over the past year. This suggests that unless you received a 2 percent raise this year, you're likely worse off than before. But don’t fret…</p>
            <p>The following day, Federal Reserve Chair <a onclick="javascript:pageTracker._trackPageview('/outgoing/www.bloomberg.com/news/2014-06-20/treasury-break-even-rate-rises-to-3-month-high-on-fed-outlook.html');" href="http://www.bloomberg.com/news/2014-06-20/treasury-break-even-rate-rises-to-3-month-high-on-fed-outlook.html" target="_blank">Janet Yellen dismissed the CPI report</a> as “noisy.” This dismissal seems odd, especially with the news of In-N-Out, the popular California burger chain, raising prices due to the <a onclick="javascript:pageTracker._trackPageview('/outgoing/losangeles.cbslocal.com/2014/06/17/in-n-out-raises-prices-blames-cost-of-ingredients/');" href="http://losangeles.cbslocal.com/2014/06/17/in-n-out-raises-prices-blames-cost-of-ingredients/" target="_blank">surging costs of dairy and beef</a>. Just noise, perhaps?</p>
            <p>In Yellen’s world—a place where the polar vortex is blamed for sluggish GDP—maybe it is. Yet, the price rises of dairy and beef are a direct result of the <a onclick="javascript:pageTracker._trackPageview('/outgoing/www.latimes.com/local/lanow/la-me-ln-drought-worsens-across-california-20140619-story.html');" href="http://www.latimes.com/local/lanow/la-me-ln-drought-worsens-across-california-20140619-story.html" target="_blank">devastating drought in California</a>. Somehow, the Fed’s head claims these price increases are inconsequential.</p>
            <p>It's difficult to understand how the Fed determines what constitutes noise. To us, rising prices are simply that—rising prices. And as for the drought, we recently drove through its epicenter on a Sunday. <a href="https://economicprism.com/the-paradox-of-fed-credit/#more-3520" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
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            <p><a href="https://economicprism.com/plume-economics/"><img decoding="async" class="alignleft wp-image-3515 size-full" title="Plume Economics" src="https://economicprism.com/wp-content/uploads/2014/06/Plume.jpg" alt="" width="150" height="150"  /></a>Central banking, deceptive monetary practices, and significant bank bailouts form what we refer to as a trifecta of moral transgression. Recently, we emphasized how the Federal Reserve employs massive money creation to elevate financial assets—primarily owned by the wealthy—on a tide of debt.</p>
            <p>The public has long been aware that the Federal Reserve generates money and lends it to the Treasury. This reality is not new and is publicly acknowledged as a key monetary policy. The intent behind reducing interest rates is to spur demand and stimulate economic growth, yet its actual impact has been an increase in asset prices.</p>
            <p>If you believed the stock market was a true representation of free-market capitalism, free from central bank influence, we must regretfully inform you otherwise. Central banks worldwide are creating money from thin air to purchase stocks. <a href="https://economicprism.com/plume-economics/#more-3513" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
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            <p><a href="https://economicprism.com/the-trifecta-of-depravity/"><img loading="lazy" decoding="async" class="alignleft wp-image-886 size-full" title="The Trifecta of Depravity" src="https://economicprism.com/wp-content/uploads/2011/12/GovernmentDebt.jpg" alt="" width="150" height="150"/></a>Today, it’s not hard to see the increasing economic inequality and stark contrasts between different social groups. The affluent have never fared better, enjoying a booming stock market, escalating home values, and record corporate profits, with the top 10 percent earning over half the nation's total income.</p>
            <p>In stark contrast, the middle class has been decimated. Many well-paying white-collar jobs have been eliminated, and numerous manufacturing roles have been offshored.</p>
            <p>Consequently, former middle-class workers now find themselves competing for low-paying service positions. It’s no surprise that the labor force participation rate has sunk to a 36-year low, and the total workforce has been on a steady decline since the start of the millennium.</p>
            <p>It’s disheartening for individuals to work for a fraction of their former earnings, particularly when the Federal Reserve’s zero interest rate policy has eroded the rewards for hard work, saving, and self-sufficiency. Many people would rather withdraw from the labor force than accept menial jobs that offer little in return. <a href="https://economicprism.com/the-trifecta-of-depravity/#more-3506" class="more-link">Continue reading <span class="meta-nav">→</span></a></p>
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