Thursday, July 10, 2014

The fed's regresssive tax on the poor

I just recently got my 401k/SEP statements and I'm a rockin'

With the feds easy money policy, people with money are kicking ass.

See, cheap money means company's costs of capital are lower which means more on the bottom line. Couple that with a soft economy which suppresses labor costs and my 401k statement starts kicking ass.

But the Feds easy money comes at a price.

Devalued dollars means it costs more for commodities such as gasoline, grains, meats, etc.

So while inflation is low in aggregate, the cost that middle income people have to pay for gasoline and food is killing them.

U.S. food prices are on the rise, raising a sensitive question: When the cost of a hamburger patty soars, does it count as inflation? It does to everyone who eats and especially poorer Americans, whose food costs absorb a larger portion of their income. But central bankers take a more nuanced view. They sometimes look past food-price increases that appear temporary or isolated while trying to control broad and long-term inflation trends, not blips that might soon reverse…
The consumer price of ground beef in May rose 10.4% from a year earlier while pork chop prices climbed 12.7%. The price of fresh fruit rose 7.3% and oranges 17.1%. But prices for cereals and bakery products were up just 0.1% and vegetable prices inched up only 0.5%. The U.S. Department of Agriculture predicts overall food prices will increase 2.5% to 3.5% this year after rising 1.4% in 2013, as measured by the Labor Department’s consumer-price index. In a typical supermarket, shoppers are seeing higher prices around the store’s periphery, in the produce section and at the meat counter.


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