By Daisy Luther
Fellow patriots, please listen to this short, inspiring message from General Flynn. General Michael Flynn exemplifies patriotism, courage, and love of God and country - despite some of his own countrymen relentlessly attacking him. Donations for his defense are greatly appreciated. If you can only give $5.00, please do so - every little bit helps. Thank you so much, and God bless. Letter from General Flynn.
We’ve been pretty lucky over the last ten years in terms of inflation, which has remained at about 2%. However, if the Wall Street Journal is correct, our luck is about to run out.
The price of just about everything is set to increase in the coming months. Part of this is because manufacturers and suppliers are facing rising costs, just like the rest of us.
Airlines are paying about 40% more for jet fuel than they were a year ago. Trucking costs were up 7% annually in September, as trucking companies passed along their own higher labor costs. Private-sector wages and salaries in the September-ended quarter rose 3.1% from a year earlier, the strongest gain since 2008, the Labor Department said Wednesday.
Meanwhile, U.S. manufacturers are paying roughly 8% more for aluminum and 38% more for steel than a year ago as the industry adjusts to tariffs the Trump administration levied on imports of those metals. Also, a 10% tariff the administration imposed in September on $200 billion worth of various goods from China is weighing on businesses that buy those imports. (source)
With that being the case, it isn’t surprising that those costs will be passed on to consumers.
What is inflation?
Here are some basic facts about inflation from Investopedia.
- Inflation is a sustained increase in the general level of prices for goods and services.
- When inflation goes up, there is a decline in the value, or purchasing power of money.
- Variations on inflation include disinflation , deflation, hyperinflation and stagflation.
- Theories as to the cause of inflation are up for debate. Some common theories include demand-pull inflation, cost-push inflation, and monetary inflation.
- When there is unanticipated inflation, creditors lose, people on a fixed-income lose, menu costs go up, uncertainty reduces spending and exporters aren’t as competitive.
- Lack of inflation (or deflation) is not necessarily a good thing and can lead to destabilizing deflationary spirals.
- Inflation is measured with a price index.
- The two main groups of price indexes that measure inflation are the Consumer Price Index and the Producer Price Indexes. The GDP- and Price-deflator are also used.
- Interest rates are decided in the U.S. by the Federal Reserve. Inflation plays a large role in the Fed’s decisions regarding interest rates since it uses inflation-targeting as a policy.
- In the long term, stocks and precious metals are good protection against inflation. (source)
No matter what your spending habits are, you’ll see the effects if we face the kind of inflation that is being predicted by the WSJ.
The problem is, consumers are barely getting by as it is
Despite reports of a burgeoning economy, the picture that a lot of us are seeing isn’t quite so rosy. Lots of middle-class families are truly struggling to get by as the cost of living increases but wages remain stagnant. Michael Snyder wrote on his website, The End of the American Dream, that 62% of all jobs don’t pay enough to support a middle-class lifestyle.
According to a shocking new study that was just released, 62 percent of all jobs in the United States do not pay enough to support a middle class life. That means that “the American Dream” is truly out of reach for most of the country at this point. Today, Americans are working harder than ever but the cost of living continues to rise much faster than our paychecks are increasing.
Earlier this month, I went and looked at the latest numbers from the Social Security Administration, and I discovered that 50 percent of all American workers make less than $30,533 a year. But that is just above poverty level. In fact, the federal poverty level for a family of five is currently $29,420. Most families are just barely scraping by from month to month, and most U.S. workers are just one major setback away from falling out of the middle class…
…We have been told that the economy has been “booming” in recent years, but the truth is that it has only been booming for people at the very top of the pyramid. (source)
But it really gets even worse than that. It goes far beyond not being able to go on vacations or dine out occasionally. Almost half of all Americans can’t even afford to pay for both food and rent in the same month.
And now, with burgeoning inflation headed our way, those who have been barely getting by are going to start seeing a serious decline in their lifestyles.
Here are some examples of the inflation we’re about to see
These are some of the companies that are planning to raise prices in 2019 (or have just recently raised their prices) to cover growing costs and boost profits, via the WSJ.
- Oreo cookie and Ritz cracker maker Mondelez International Inc plans to raise prices in North America next year
- Steven Madden Ltd. said this week it was raising prices on handbags and other products it imports from China
- Apple Inc. AAPL 2.61% recently raised prices on new MacBook Air and iPad Pro products by about 20% and 25%
- Delta, JetBlue Airways Corp. and American Airlines Group Inc. have all raised fares or fees to cover higher fuel costs.
- Paint makers Sherwin-Williams Co. and PPG Industries Inc. in recent weeks said they would keep raising prices next year to cover the steeper climb in costs for ingredients…
- McDonald’s Corp.’s 2.4% same-store sales growth in the U.S. in the third quarter was fueled by higher-priced burgers.
- Brinker International Inc. said it raised the price of the two-entrees-and-an-appetizer deal at its Chili’s Grill & Bar chain to $25 from $22.
- Habit Restaurants Inc. raised prices by 3.9% in late May.
- Hershey Co. HSY -0.82% said it will sell candy in new packaging next year at higher prices per ounce.
- Kellogg released a chocolate variety of its Thick & Fluffy Eggo waffles and priced it 12% higher than similar products.
Prices have already been rising for dining out
The price of dining out has already been increasing at lower-priced outlets. Here’s how much the cost of the following items increased in the 3rd quarter of this year compared to the same time last year:
- McDonald’s Big Mac: up 4.7%
- Chipotle Steak Burrito: up 4.4%
- Starbucks coffee: 8.9%
- Dominos Ultimate Pepperoni Pizza: 5.9%
- Jimmy John’s Turkey Sandwich: 6%
- Panda Express Orange Chicken: 2.8%
Americans already spend an obscene amount on eating outside of the home each year. Zero Hedge recently reported of Q3, “…if one combines the data from the most recent two quarters, the contribution from eating at restaurants is the highest going back all the way to 1992.”
Other things with correlation to inflation
Inflation on its own isn’t going to destroy the economy, but it is often a precursor of negative things to come.
For example, you often see an increase in unemployment that goes hand in hand with inflation.
Inflation is also related closely to unemployment. The Phillips Curve relates the inverse relationship between the two. The theory states that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment. However, the original concept has been challenged empirically due to the occurrence of stagflation in the 1970’s when there were high levels of both inflation and unemployment. Economists have responded by allowing for many different Phillips Curves to exist, or by amending the relationship between inflation and unemployment to changes in the rates of inflation and unemployment. (source)
The Federal Reserve generally monkeys around with interest rates during an inflationary period as well.
Interest rates directly affect lending and borrowing because higher interest rates make servicing loans more costly… A tightening, or rate increase, attempts to head off future inflation. (source)
This means it will be a lot pricier for people to buy homes and cars because their monthly payments will go up due to rising interest rates. Those items high-ticket items purchased during an inflationary period will cost the buyer far more than they would if purchased during better economic times.
How does an everyday middle-class family battle inflation?
It’s the same thing I’ve said over and over. As things get rough economically in our country, those who make the switch from being a consumer to being a producer will fare much better.
When you look at the prices of the things that are about to be affected, there are a lot of those items you just don’t need. Storebought crackers, fancy purses, dinner out? They aren’t essential. But don’t be deceived into thinking that inflation won’t affect you directly.
Those won’t be the only prices you see going up – I’m pretty certain we’re going to see inflation across the board, sort of a cascading effect. Everything which must be transported (so, basically everything that isn’t produced locally) is going to go up. Everything imported is going to go up. Small businesses will have to raise their prices to be able to afford to pay for the things in which the price is going up. Interest rates will make buying homes and cars out of reach for many Americans – even more so than those dreams are now.
The key is production.
- What can you make yourself with resources you can acquire locally?
- What staples can you purchase in bulk to be able to make things from scratch?
- What can you build?
- What can you reuse?
- What can you repair?
- What can you grow?
This is so simple that it seems ridiculous, but it’s how you survive rampant inflation and economic crises. You reduce your dependence on the consumption that has become the American way.
The more things you can provide for yourself, the more money you have left for the things you cannot make on your own. So, we’ll be talking a lot more about DIY and frugality on this website, because those are the survival skills you need to get through the inflation and poor economy that is headed our way. Be sure to go participate in the forum and join the discussions on DIYs, frugality, and the economy.
What will you do to fight inflation?
If you don’t feel that inflation will affect you very much, what are the things you do to make yourself more resistant to it? What are the things that you can produce on your own to fight an economic crisis? What are some expenditures that you plan to cut?
Share your thoughts in the comments below.
Daisy is a coffee-swigging, gun-toting, homeschooling blogger who writes about current events, preparedness, frugality, and the pursuit of liberty on her websites, The Organic Prepper and DaisyLuther.com She is the author of 4 books and the co-founder of Preppers University, where she teaches intensive preparedness courses in a live online classroom setting. You can follow her on Facebook, Pinterest, and Twitter,.