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Inflation - Crash Course Chapter 11

Our devaluing dollars are a historically recent phenomenon
Friday, August 29, 2014, 6:36 PM

Chapter 11 of the Crash Course is now publicly available and ready for watching below.

For close to 300 years, inflation in the US remained very subdued. Small spurts occurred around major wars (Revolutionary, Civil, WW1, etc), but after each, inflation quickly trended back down to its long-term baseline. If you lived during this stretch of time, your money had roughly the same purchasing power your great-grandfather's did.

But something changed after inflation spiked yet again during World War 2. With the permanent mobilization of the military industrial complex and the start of the decades-long Cold War, combined with a related acceleration in government deficit spending, inflation did not come back down. It remained elevated, and in fact, rose further.

That is, until the "Nixon shock" in 1971, when the dollar's remaining ties to gold were severed. Then inflation EXPLODED. And the inflationary moon-shot has continued since, up to present day.

So, we've become used to a system in which our money loses purchasing power over the years. For anyone aged 50 or younger, it's pretty much all we've ever known.

But it doesn't have to be this way. Indeed, our country did fine for centuries without systemic continual chronic inflation.

So why do we accept it today?

For the best viewing experience, watch the above video in hi-definition (HD) and in expanded screen mode

Coming next Friday: Chapter 12: How Much Is A Trillion?

For those who simply don't want to wait until the end of the year to view the entire new series, you can indulge your binge-watching craving by enrolling to PeakProsperity.com. The entire full new series, all 27 chapters of it, is available -- now-- to our enrolled users.

The full suite of chapters in this new Crash Course series can be found at www.peakprosperity.com/crashcourse

And for those who have yet to view it, be sure to watch the 'Accelerated' Crash Course -- the under-1-hour condensation of the new 4.5-hour series. It's a great vehicle for introducing new eyes to this material.

Transcript: 

We’ve got one more key concept to share before we go deeper into current economic conditions: Inflation.

Most of us think of inflation as rising prices, as if it were things becoming more expensive, but that’s not quite right.  It's actually your money losing value.

Imagine if one year an apple and an orange are a dollar each, but next year they are ten dollars each.

Since you enjoy eating apples and oranges the same amount in one year as the next, then they will be exactly the same next year as this year. 

But next year they will cost ten times as much, which means that the only thing that’s truly changed in this example is your money, which has declined in value.

Inflation is not caused by rising prices.  Rising prices are a symptom of inflation.  Inflation is caused by the presence of too much money in relation to things we want to buy. 

What we experience is things going up in price, but in fact inflation is really the value of our money going down, simply because there’s too much of it around.

Now, here’s an example.  Suppose you are on a life raft and somebody on board has an orange that they are willing to sell for money.

Only one person in the raft has any money and that’s a single dollar.  So the orange sells for a dollar.  But wait! 

Just before it sells you find a ten-dollar bill in your pocket.  Now how much do you suppose the orange sells for?  That’s right, ten bucks.  

It just shot up in price ten-fold.  But it’s still the same orange right? 

Nothing about the utility or desirability of the orange has changed from one minute to the next, only the amount of money kicking around in the boat. 

Which puts us in the camp of Milton Friedman who claimed that inflation is everywhere and always a monetary phenomenon.

Again, inflation is not rising prices.  They are the symptom.  The cause of rising prices everywhere and always is an excess of money relative to the things people want to buy.

And what’s true within our tiny life raft example is equally true across an entire nation.  Here, let me illustrate this point using a long sweep of US history.

What we’re looking at here is a graph of price levels in the United States that begins on the left in 1665 and progresses more than 300 years to 2008 on the right. But at this moment, only inflation over the period from 1665 to 1776 is marked on the chart. 

On the “Y” Axis what is being charted are price levels *not* the rate of inflation. 

In 1665 the basic cost of living was set to a value of “5”. What is most striking about this chart to me is that from 1665 to 1776 there was absolutely no inflation. Zero. None.   

That is, over a one hundred and eleven year period if you saved a dollar you had a dollar.  Put another timeline under this one, with 1903 on one end and 2014 on the other. To contrast this to today, if one hundred and eleven years ago you saved a dollar, today you would have about 2 cents.

Along came a war, the Revolutionary War, and the country found itself unable to pay for the war with the gold and silver to be found in the treasury. 

So a paper currency called the “Continental” was printed, and at first it was fully backed by a specified amount of real gold and/or silver in the treasury.

But then the war proved to be more expensive than thought and more and more continentals were printed.

Then the British, aware of the corrosive effects of inflation on a society, started counterfeiting and distributing vast amounts of bogus continentals and soon the currency began to collapse.

Seen on the inflation chart, the Revolutionary War took the general price level from a reading of “5” to a reading of “8” which is a pretty serious increase of some 60% in so short a time.

After the war, the paper continentals were utterly rejected by the populace, who strongly preferred gold and silver.  Most interestingly, with the return to using gold and silver as money, price levels promptly returned back to their prewar levels.

The next serious bout of inflation was also associated with a war, again due to overprinting of paper currency, and again, upon conclusion of the war we saw a relatively prompt return of prices to their pre-war levels where they stayed for an additional 30 years. 

By now, we are nearly 200 years into this chart and we find that the cost of living is roughly that same as it was in 1665.    Just try to imagine a world where you will know the price of things hundreds of years into the future...because they will be the same as today.

At any rate, prices remained stable until - you guessed it - another  war came along – the civil war – which was highly inflationary.  Eventually, before too long prices again returned to their baseline levels.

But then another war came long, this one even bigger than any before, and again it was a highly inflationary event.

And then war came along, even bigger than any before it, which again proved inflationary but this time, something odd happened.  Inflation did not retreat before the next war began. 

Why?  Two reasons.  First America was no longer on a gold standard, but instead a fiat paper standard administered by the Federal Reserve, and the populace did not have another form of money to which it could turn in preference.  

And second instead of dismantling the war apparatus upon conclusion of hostilities the Pentagon was built, full mobilization was maintained and a protracted cold war was fought; certainly as inflationary a conflict as any shooting war ever was.

And now if we look at the entire sweep of history we can make an utterly obvious claim; all wars are inflationary. Period; no exceptions. 

The reason is simply because the government spends more money than it has, so we can amend this statement to say that ”government deficit spending is inflationary.

We discussed the reason why back in the chapter on money and wealth where we noted that prices can only remain stable if there is a stable relationship between the amount of circulating currency and the things we need and want to buy.

When the government borrows money that is printed out of thin air by a compliant central bank, the new money definitely has real purchasing power.  But where did that come from? 

By definition it is not possible to print up real things, only purchasing power so any and all acts of printing simply removes a tiny fraction of the value of all the other outstanding money and gives that real purchasing power to the new money.

At any rate, back to our main story.  Here’s inflation between 1665 and 1975.  Knowing what you now know about Nixon’s actions on August 15th 1971 where any physical restraint on human desires was removed from the system, what do you suppose the rest of the graph looks like between 1975 and today?

This is your world. You’ve been living on the steeply rising portion of the graph for so long that that you probably view it as level ground. 

That is, you expect inflation and plan for it, as if it were an unavoidable feature of life like gravity.    But I hope we've shown you that sustained inflation wasn't always a permanent condition of life but rather a recent development.

And the cause of that persistent inflation is simply that money and debt have been growing faster than the economy on a percentage basis for decades.

Which means your money has been declining in value exponentially.

That’s what this “hockey stick” graph is telling you.

What does it mean to live in a world where your money loses value exponentially?  You know what it means, because you live there.

It means increasingly having to work harder and harder just to stay in place; and it means increasingly perplexing and astoundingly risky investment decisions have to be made in an attempt to grow ones savings fast enough to outpace the creation of money and debt. 

It means two incomes are needed where one used to suffice, leaving less time for family & community strengthening  while both parents work.   

A world of constantly eroding money is a devilishly complicated world to navigate and, for most, leaves scant room for error.

But - wait a minute - you're thinking - inflation has not yet really gotten out of control yet and the Fed has been printing like crazy for a while, how can that be?

Actually we are experiencing a huge amount of inflation but we have to remember that inflation applies to anything that people might want to buy. 

Sometimes inflation means the basic necessities of life like bread and gasoline become more expensive, and sometimes inflation means that our houses become more expensive to purchase, and sometimes, as is true today, it means things like stocks and bonds shoot up in price.

Quite unfairly, when governments print like crazy, those closest to the printing benefit the most because they have access to all that newly created money first.  The name for this is seignorage, and it has been known about for a long time.  It's a very well understood process.

In today's world, those closest to the money printing are already fabulously wealthy – you’ve heard about the 1% - and after a point, additional money in their hands does not stimulate as much in the way of additional purchasing of things like bread and gasoline...there's only so much one can consume.

The wealth disparity in the US is now as large as it has ever been and that is largely just a known side-effect of central bank printing.

But the money these ultra-wealthy families and financial institutions have piles up faster and faster and it has to go somewhere, and so it does.  First into anything that can contain that much money, so it goes into the largest and most liquid markets, like US Treasury bonds and the stock market.

That's stage one and it has already happened.

Then it goes into things rich people can most easily appreciate such as fine wine, high-end art, and trophy properties.

That's stage two, and it has already happened.

Eventually, as paper investments begin to look shaky due growing concerns that there's just too many claims on real wealth,  these concentrated holders of wealth will shift out of paper and back into real things. 

Slowly at first, but then suddenly towards the end.

Real things like land, metals, housing, and basic commodities begin to rise in price as we shift to stage three of the inflationary process.

Looking at the exponential trajectory of our money supply since America went off the gold standard in 1971, and the increasingly extreme recent measures discussed in the chapter on Quantitative Easing, we are dangerously close to entering Stage Three if not already in its early days.

John Maynard Keynes, the father of the branch of economics that utterly dominates our lives, had this to say about inflation.

“Lenin was certainly right, there is no more positive, or subtle or surer means of destroying the existing basis of society than to debauch the currency.

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of the citizens.

The process engages all of the hidden forces of economics on the side of destruction, and does it in a manner that not one man in a million can diagnose.”

Now, finally, in this chapter of the Crash course we can string together these three important dots.

  • Number 1 - In 1971 the US, and by extension the world, terminated the last connection to a gold restraint and federal borrowing “turned the corner, never to look back.
  • Number 2 -  At this same time, the money supply and debt levels turned the corner started piling up at  rates much faster than the economy was growing; and
  • Number 3 -  Inflation is the fully predictable outcome of facts #1 and #2. 

Boom.  Boom. Boom. One, two, three.  All connected, all saying the same thing, with profound implications for our future.

Now if you’re of a mind that there’s no reason that all three of these graphs cannot just continue to exponentially accelerate to ever-higher amounts, without end, then there’s no point in watching the rest of the Crash Course.

However, if you don’t happen to believe that, then you’re going to want to see the rest of the video series.

All right, the point of this section was to help you appreciate the fact that our country has not always lived under a regime of perpetual inflation, and that, historically speaking, it’s actually a rather recent development. 

So now we have our fifth key concept: Inflation is everywhere and always a monetary phenomenon.

Flipped a bit, we can say that inflation is a deliberate act of policy.  We might also observe that this policy benefits a very small group of individuals and institutions at the expense of literally everybody else.

Most unfairly, it robs from our future selves to satisfy our current cravings.

Okay, now that we’ve covered compounding, money, and inflation, you’re nearly fully-equipped with the tools to get the most from the remaining sections of The Crash Course.

But, there’s one more tool to put in our kit:  A better appreciation for really big numbers. 

Please join me for the next chapter: How Much Is A Trillion?

Thank you for listening.

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20 Comments

Bankers Slave's picture
Bankers Slave
Status: Platinum Member (Offline)
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Posts: 523
Not as thorough as Chris/Adam, but succint all the same.

http://whatreallyhappened.com/WRHARTICLES/slavetobanks.php

davefairtex's picture
davefairtex
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long term inflation chart

I have to say, the long term inflation chart and Chris's way of presenting it was one of my classic take-aways from my first experience with the crash course many years ago.  I'm glad to see it has been retained!

I do have a question, however.  Where did you get the data behind that price chart?  I want to get that time series!

hidden-in-sight's picture
hidden-in-sight
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Jim H's picture
Jim H
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Inflation is happening...

And the imperative for more and more debt continues.  I want to take a moment to draw a parallel - that between the shrinking size of products (as a means to hide the inflation) and the extension of debt terms (as a way to spend ahead not just your children's future, but our grandchildren's as well in my linked example below from Spain).  In both cases, inflation is masked to the less discerning eye.  

As a prepper I have stacks of the large packages of Scott toilet paper in my basement, and I recently pulled up one of the older packages to supplement the house.  Holding one of the old rolls vs. the new, the truth was obvious... while still 1000 sheets, the sheets were 3/10 inch less wide now.  I had never noticed this swizzle before, but there it was;

  

And then today I see this on ZH;

http://www.zerohedge.com/news/2014-09-01/spain-sells-first-ever-50-year-...

Governments are having to extend (in time) their own debt payment terms in order to keep on borrowing... it's no different than what you and I do to afford that new car.....

The phenomenon of extending debt terms hides the increasing cost of things.... hides the inflation.  The 48 month car loan used to be the std., but now the 60 month loan appears to be the norm.  The car costs more, but the payment stays the same with a longer term. 

Sometimes the inflation is in your face, like the $11.99 per pound I paid for cold cuts at the A&P yesterday.  Oftentimes these days it is less obvious.. but that does not mean it is not there.   

davefairtex's picture
davefairtex
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inflation in tuna

JimH-

Several years ago I noticed this when cans of tuna went from 6oz down to 5oz.  The scurvy dogs.  Pretty soon we'll have toilet paper that is an inch wide.  At some point, it will just start to get silly.

Perhaps that is why US companies are still quite profitable.  They increase profits by reducing sizes.  I know the overall raw commodity prices haven't been increasing...just look at raw commodity prices over the past 3 years and you will see what I mean.

 

 

Jim H's picture
Jim H
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True Dave...

Commodities have been cooling off of late, but if crude is leading the way, then it seems a break upward may have just happened;

http://www.goldscents.blogspot.com/2014/08/chart-of-day_30.html

Certainly, commodity sentiment is very low;

http://www.advisorperspectives.com/dshort/charts/index.html?guest/2014/C...

I don't buy the idea that US companies are, "quite profitable".  Financial engineering is at work;

The “valuations are normal” line proffered by Yellen and her band of money printers, however, is simply an adaptation of the Wall Street hockey sticks based on projected earnings ex-items. That is to say, the kind of “earnings” estimates that omitted on average 23% of actual P&L charges over the course the 2007-2010 boom and bust cycle owing to non-recurring write-downs of goodwill, plants, leases and restructuring costs, among countless other real expenses—all of which ultimately consume corporate cash and capital. As I demonstrated in “The Great Deformation”, cumulative S&P 500 “earnings less items” over that four-year period amounted to $2.42 trillion compared to GAAP reported earnings—-that is, the kind that you don’t go to jail for reporting to the SEC—of only $1.87 trillion.

http://davidstockmanscontracorner.com/the-implosion-is-near-signs-of-the...

 

gillbilly's picture
gillbilly
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Posts: 423
Great Scott!!

But Jim, don't discount the value of the smaller. It has "long lasting value" while the bigger one does not. It says it right on the package. surprise

Time2help's picture
Time2help
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Tuna Special on Aisle 3
davefairtex wrote:

JimH-

Several years ago I noticed this when cans of tuna went from 6oz down to 5oz.  The scurvy dogs.  Pretty soon we'll have toilet paper that is an inch wide.  At some point, it will just start to get silly.

Perhaps that is why US companies are still quite profitable.  They increase profits by reducing sizes.  I know the overall raw commodity prices haven't been increasing...just look at raw commodity prices over the past 3 years and you will see what I mean.

Don't forget to keep an eye out for when the tuna cans shrink in size but the weight stays the same.  Cesium 137 and Strontium 90 both have relatively high molecular weights...frown

Jim H's picture
Jim H
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Hey Gillbilly...

Yeah, that the smaller roll had the extra label of "long lasting value" was kinda precious...  I hope all is well.  Thanks to the wonderful properties of Gold, my superhero suit of Gold remains bright and shiny even though the (artificially induced.. don't tell Dave!) market doldrums continue.

davefairtex's picture
davefairtex
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overall commodity prices

JimH-

Do you think the prices of the overall commodity complex has also been suppressed artificially?

From the data I can see that the hedge fund guys (Managed Money) are the group that move prices around in gold over the weekly/monthly timeframe.  And when the commodity group falls in price, Managed Money decides not only to sell their long positions, they go short.

When the commodities overall rose in price this year, so did gold.  Then when commodities dropped, so did gold.

That correlation is why I like to watch commodity prices.  I prefer finding correlations to blaming some malevolent Deux Ex Machina as to why gold isn't doing what we all think it should be!  Especially if my correlations can help me predict prices.

I believe that manipulation - trend manipulation - is just a "get out of jail free" card out for newsletter writers who were wrong about their predictions.  If gold goes up, they are geniuses and that newsletter was well worth the money, and if gold goes down, its MANIPULATION and so clearly they can't be called to account - and of course you should still buy the newsletter.

We all have a choice - we can either choose to believe in their worldview, or not.  I don't.

Tuna can manipulation, on the other hand...and toilet paper manipulation is quite another matter!

Arthur Robey's picture
Arthur Robey
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Mumbo Jumbo Money

Alan Watts explains your guilt and superstitions about "money" and why more and more people are on social security.

Warning: Not for Calvinists! His argument will send you into an uncontrollable paroxysms of Rage.

(Go on- have a peek.)

davefairtex's picture
davefairtex
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alan watts

Arthur-

While I enjoyed his bit about the history of guilt in our culture and the utility of machinery to society (both excellent points), my impression is he has an end point he really wants to arrive at, and so he abuses the facts and glosses over some really critical bits (especially about how people behave in the real world) until he arrives at his desired conclusion.

"Money is just bookkeeping" - implying we can make money be whatever we want it to be, we can untether it completely from reality, and yet have no unintended consequences.

"We can give everyone a wage" and at the same time "we can have an understanding not to put prices up" - flying in the face of how people and systems have worked since the dawn of time.  Somehow get "the media and hollywood involved" to convince people to act against their own self-interest.  The propaganda solution hasn't had a great history of working out either, especially if people can make a buck by betting against it.

Whatever system we develop has to align with and be grounded by how people really are, or else it will be doomed to failure.

Still, I liked the bits about confession.  :-)

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Jim H
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More on US Corp. Profits

DaveF said above,

Perhaps that is why US companies are still quite profitable.

I need to comment on this again... it confuses me why our PP.com metals commentator would make such a status quo-supportive statement in the face of all that we know.  Where is the nuance?  Where is the acknowledgement of the rot?  In contrast, I am thankful that CHS has found his own voice as of late and is hitting the ball so squarely;

http://www.oftwominds.com/blogsept14/corp-America9-14.html

As for dodgy accounting: when the dodgy accounting has been institutionalized, it's no longer viewed as dodgy. Which brings us to the money shot of the comment: “Executive compensation based on stock performance” is killing corporate America.

When executives and others at the top of the corporate pyramid have such an enormous incentive (stock options worth tens of millions of dollars) if they can push the stock price higher with buy-backs paid with borrowed money and accounting gimmicks that inflate headline earnings, then why wouldn't they do precisely that?

The profits are as bogus as the stock prices: both are relentlessly gamed to make sure fortunes can be reaped in a few years by those at the top.

As the comment noted, this hollowing out of corporate strengths to enable short-term profiteering by the handful at the top leads to systemic fragility. No shock is needed to bring down these fragile corporate structures: existing debt and the slightest tremor of global recession will be enough to topple the rickety facade.

   

davefairtex's picture
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profits bogus

JimH-

The profits are as bogus as the stock prices: both are relentlessly gamed to make sure fortunes can be reaped in a few years by those at the top.

Well now, just because my good friend CHS uttered something doesn't make it true.  Charles sometimes engages in hyperbole - perhaps this is one of those times?

Here's why I say our companies are profitable.  Its because this chart says so.  Corporate profits as a share of GDP are the largest now in the history of the timeseries.

As to whether or not this supports the status quo - that is your spin, not mine.  I'd conclude something very different from this chart.  But of course you didn't ask me my interpretation, you just attacked me, so I won't spend the energy.  Pearls, swine, etc.  If you really want to know what I think, go read what data-driven John Hussman says about it.  Try googling "hussman corporate earnings."  You might even see this very same chart there, if you take the time to actually read what he wrote.  Like I did.

That Hussman guy is pretty sharp.  And did I mention he is data-driven?

climber99's picture
climber99
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We engineer Inflation because

We engineer Inflation because it encourages growth.  It does this by discouraging you to save.  i.e. spend money now because the same amount of money will purchase less in the future.  Nations need to grow because they are in competition for resources with other Nations on the Planet.  Nations that fail to grow get exploited by the Nations that do grow.

Remember that Inflation is caused by having the money supply increase at a faster rate than GDP and that the money supply is created as debt.  Therefore debt increases at a faster rate than GDP which makes paying interest on your debt more and more difficult.  The solution is to reduce interest rates to near zero which is what we are seeing now.

The really, really interesting question that you should be asking yourselves is : what happens when growth in GDP is no longer possible because we have reached the limits to growth on our finite planet ! 

I put it to you that we will still engineer Inflation but not to generate growth but to reduce debt.  A non-debt money creation will have to be developed. 

One idea could be to for the treasury to issue special infinite year bonds at 0% interest that the FED buys. The FED then gives everyone say $10,000 that must be used to repay as much of their debts as possible.  Those people without any debts would become $10,000 richer.  The increase of the money supply that this would create would be counteracted somewhat by a deduction in the money supply as the debts were paid off so resultant inflation would not necessarily be very high.  Just one idea of many. The figure of $10,000 was used as an illustration.

Ed

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Jim H
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It's not the data.. it's what underlies it.

The fact that the tuna can and toilet paper is shrinking is not why corp. profits are at an all time high.. these are small factors.  In a world where we can't trust the, "data", we have to ask what underlies it.  Yes, I see your, "Dave P" analysis;

http://www.maxkeiser.com/2014/06/whats-the-source-of-soaring-corporate-p...

So to Hussman’s point – is this sustainable? As long as work continues being outsourced, unemployment is relatively high (i.e. wage pressures are low) and as long as the debt remains intact, I think it is.
Sustainable?  You forget Dave, I live this bubble in Corp. profits as a manager from the inside of the Fortune 50... where we net contract (in the US) thru layoffs every year.  As much as I enjoy the technical challenges of my job, the relentless pursuit of the next short term increment EPS growth is all that matters anymore to our executives.  It is not sustainable because there is no more blood to let.. and that is the nuance that I want to see in commentary.. the truth behind the data. 
 
This guy does a pretty good job of looking at the data;
http://davidstockmanscontracorner.com/double-whammy-in-the-wall-street-casino-the-corporate-earnings-fiddle-inside-the-feds-rigged-market/

Double-Whammy In The Wall Street Casino: The Corporate Earnings Fiddle Inside The Fed’s Rigged Market

May 3, 2014

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By Lance Roberts at Street Talk Live

Just like the hit series “House Of Cards,” Wall Street earnings season has become rife with manipulation, deceit and obfuscation that could rival the dark corners of Washington, D.C. From time to time I do an analysis of the previous quarters earnings for the S&P 500 in order to reveal the “quality” of earnings rather than the “quantity” as focused on by Wall Street. One of the most interesting data points continues to the be the extremely low level of”top line” revenue growth as compared to an explosion of the bottom line earnings per share. This is something that I have dubbed “accounting magic” and is represented by the following chart which shows that since 2009 total revenue growth has grown by just 31% while profits have skyrocketed by 253%.

What is real?  What is not?  How can EPS growth be sustainable when there is no revenue growth? As the author above says regarding earnings.. look at, "Quality vs. Quantity".  How exactly Dave can corp. earnings growth be sustainable when, as you admit yourself below, Corporations are essentially killing their own Golden Goose, aka The Consumer, aka the Worker?;
Wages & Salaries/GDP dropped from about 47% of GDP in 2001 down to 42.7% of GDP today. At the same time, (non-financial) corporate profits rose from about 2% to 6% of GDP. So wage earners lost 4.3%, while non-financial companies gained 4%.
Read more at http://www.maxkeiser.com/2014/06/whats-the-source-of-soaring-corporate-profits-stagnant-wages/#2lOTdH9Y5YU6GSkw.99

 

taco's picture
taco
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Inflation graph data?

I would like to see that price inflation graph on a log axis. Anyone know where I can get the raw data? Searching around on the net I have found a few links to libraries, but no actual data for plotting.

Anyone have a lead on this?

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shifting sands of discussion

JimH-

So you have shifted the sands of the discussion.  My initial point here was that corporations are profitable.  This seemed to make you upset, you quoted CHS and claimed the profits were all fake, and you seemed insulted that I (as the PM commentator) would dare to support the status quo.

I responded that no, the profits were not all fake, pointed you at some actual data and encouraged you to read hussman.

Now you talk about sustainability.  I assume by shifting the discussion from "the profits aren't real" to "the profits aren't sustainable" you are implicitly acknowledging that my original point was valid.

As to sustainability, I agree with you.  Sustainable long-term?  No.  Hussman again: things eventually revert to the mean.  But for now?  I believe something will have to change to upset the relatively happy corporate-profits apple cart.  I'm keeping an eye on it, that's for sure.

My work here is done.

 

gillbilly's picture
gillbilly
Status: Gold Member (Offline)
Joined: Oct 22 2012
Posts: 423
Main St.

Jim, Nice to hear you are still wearing the gold suit. Be careful going into your mirrored bathroom, don't want to blind yourself. wink

Honestly, I'm working longer and harder, which is why I only post once in awhile. It seems for us as a society to maintain the status quo of energy output to keep the system going, main st. is being forced to shrink and work longer, harder and more efficiently.  I'll bet if we took a poll on this site as to who is working less and enjoying more pay, it would be almost non-existent. It really seems to be that simple. Energy has to keep it all going and if our fossil fuel cost is going up and shrinking, then real live people need to make up the difference.

It will eventually implode, but when? Who knows...

taco's picture
taco
Status: Bronze Member (Offline)
Joined: Jun 21 2008
Posts: 26
taco wrote: I would like to
taco wrote:

I would like to see that price inflation graph on a log axis. Anyone know where I can get the raw data? Searching around on the net I have found a few links to libraries, but no actual data for plotting.

Anyone have a lead on this?

Okay, I've made some progress on this front. I've found pricing data from the period 1913 to 2002 at this link:

http://www.census.gov/compendia/statab/hist_stats.html

I'm still looking for the data going from 1913 back to the 1700s as shown in the video. if anyone comes across it, please let me know.

Thanks!

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