Inflation is our friend!

If you don’t subscribe to http://dailyreckoning.com/, you should. It’s free, funny and a much needed bit of financial common sense. Today, Bill Bonner republished a portion of an old SNL skit.

Dan Akroyd pretending to be President Jimmy Carter on Saturday Night Live and 30 years ahead of his time:

“President Jimmy Carter: Good evening. On Tuesday, we Americans will have the opportunity to exercise our role as citizens in a free democracy. Yet, only a third of the eligible voters will actually cast ballots. The other two-thirds are, in a sense, very lucky. Because they do not know what’s going on.

“Last week, I delivered a message on inflation. Since then, the dollar has dropped in value, the stock market has sustained record losses, and the whole Dow price index increased 0.9%. In other words, our economic system is screwed, blued and tatooed! We just have to face the fact that there is simply no way to fight inflation in a capitally-intensive, highly-technological, conflict-riddled, anything-for-a-thrill world of today. That’s why, tonight, I want you to try to look at inflation in an entirely new way: Inflation is our friend.

“For example, consider this: in the year 2000, if current trends continue, the average blue-collar annual wage in this country will be $568,000. Think what this inflated world of the future will mean – most Americans will be millionaires. Everyone will feel like a bigshot. Wouldn’t you like to own a $4,000 suit, and smoke a $75 cigar, drive a $600,000 car? I know I would! But what about people on fixed incomes? They have always been the true victims of inflation. That’s why I will present to Congress the ‘Inflation Maintenance Program’, whereby the U.S. Treasury will make up any inflation-caused losses to direct tax rebates to the public in cash. Then you may say, ‘Won’t that cost a lot of money? Won’t that increase the deficit?’ Sure it will! But so what? We’ll just print more money! We have the papers, we have the mints. I can just call up the Bureau of Engraving and say, ‘Hi! This is Jimmy. Roll out some of them twenties! Print up a couple thousand sheets of those Century Notes!’ Sure, all these dollars will cause even more inflation, but who cares? Everyone will be a millionaire!

“In my speech last week, I said that America would have to undergo an austerity program, but since this revolutionary new approach welcomes inflation, our economy will be free to grow, and we can spend, spend, spend! I believe the watchwords for the ’80s should be ‘Let’s Party!’ And in that spirit, I’d like to say, ‘Live, from New York, it’s Saturday Night!’”

The Raven by Samuel Taylor Coleridge

Ponder the meaning of subversion…


The Raven
by Samuel Taylor Coleridge (1798)
 

Underneath an old oak tree
There was of swine a huge company
That grunted as they crunched the mast:
For that was ripe, and fell full fast.
Then they trotted away, for the wind grew high:
One acorn they left, and no more might you spy.
Next came a Raven, that liked not such folly:
He belonged, they did say, to the witch Melancholy!
Blacker was he than blackest jet,
Flew low in the rain, and his feathers not wet.
He picked up the acorn and buried it straight
By the side of a river both deep and great. 

Where then did the Raven Go?
He went high and low,
Over hill, over dale, did the black Raven go.

Many Autumns, many Springs
Travelled he with wandering wings:
Many summers, many Winters–
I can’t tell half his adventures.

At length he came back, and with him a She
And the acorn was grown to a tall oak tree.
They built them a nest in the topmost bough,
And young ones they had, and were happy enow.
But soon came a Woodman in leathern guise,
His brow, like a pent-house, hung over his eyes.
He’d an axe in his hand, not a word he spoke,
But with many a hem! and a sturdy stroke,
At length he brought down the poor Raven’s own oak.
His young ones were killed; for they could not depart,
And their mother did die of a broken heart.
 

The boughs from the trunk the woodman did sever;
And they floated it down on the course of the river.
They sawed it in planks, and its bark they did strip,
And with this tree and others they made a good ship.
The ship, it was launched; but in sight of the land
Such a storm there did rise as no ship would withstand.
It bulged on a rock, and the waves rush’d in fast;
Round and round flew the Raven, and cawed to the blast.
He heard the last shriek of the perishing souls–
See! see! o’er the topmast the mad water rolls!

Right glad was the Raven, and off he went fleet,
And Death riding home on a cloud he did meet,
And he thank’d him again and again for this treat:

They had taken his all, and REVENGE IT WAS SWEET! 

Bella’s Birthday

Yesterday Jessica gave birth to a beautiful, healthy baby girl. Jessica is doing fantastic and the baby couldn’t be better. She was born at 4:30 in the afternoon on the day she was “due”, October 5th, 2007. She weighed in at 7lbs. 13oz 20.5″ long.

Looking back now, everything went absolutely perfectly yesterday. But, for much of the day, it seemed like things were going bad and getting worse by the moment. …

Have you ever felt totally disconnected from (nearly) every human being around you? Kinda like you’re living in a parallel universe where certain urgent facts are crystal clear to you but not shared by anyone else around you? Well, this is how things were for Jessica and I up until about 4:10 yesterday. [Admittedly, those who know me well know that this isn’t the first time I’ve felt like this]

A few years ago Jessica and I had a similar “parallel universe” medical experience. I won’t go into all the details, but imagine this… you’re wife suddenly and unexpectedly loses consciousness while you’re driving in the car. “At least I’m in the car. I can get her help fast”, you think. You drive like hell to get her help… to the emergency room at the closest hospital.  Every traffic light is red at the wrong time. Chatting on cell phones and driving lackadaisically, every other driver on the road is oblivious to your emergency.

You’re freaked out. You actually think should could be dying, you imagine what you’ll do if that happens…

Finally, you reach the hospital! It’ll all be “ok”. You run into the emergency room and find it…. empty.  No doctors, no nurses, no hospital staff, not even a single other patient.  It’s perfectly quiet and totally empty. It happened, just like that.

The problem is expectations. I’ve seen the television show “E.R.”. When people walk into that hospital there’s an expert nurse on them immediately. Problems are solved. There’s never a shortage of resources.

Well, Turns out it isn’t like that.

I learned that a few years ago…the hard way. And yet, there’s still something absurd about standing in a line behind “chatty Kathy” in for a physical while watching your wife work her way through a major contraction. “Should I push Kathy out of the way?” I wondered.

In an emergency, you’re willing to do things you’d never consider in a normal day. In a traffic jam yesterday, I wondered if my Mercedes could go Off-road. The car is fast as hell. But that doesn’t do any good in a traffic Jam. “I should have driven the SUV”, I thought.

By the way, this IS Davenport Iowa not Chicago or any other major city.  I’ve been in no more than a dozen traffic jams here in my entire life…. maybe 13 counting yesterday.

At 1:30pm we leave the doctor’s office headed for the hospital. Jessica is dilated to 5. The doctor’s office calls ahead to let the hospital know we’re on the way. Contractions are intense. I’m thankful that we’re on our way because, to me, it seems that her contractions are as strong as I’ve ever seen. As strong as any point in labor with Max.

At the hospital, the chipper check in lady was friendly to a fault. “Hurry, Hurry” I could see in Jessica’s eyes. 

It was training day at the front desk. “Ms. Chipper” coached “Ms. Newby” through the check in program. Looking up at us at one point, Ms. Chipper says, “It’s MUCH faster when I do it myself”. “Maybe you should do it, then” I think but don’t say… we’re almost there, it’ll be ok.

Jessica has 3 contractions at the check-in desk and another one on the way to the elevator. They were pretty intense. Three separate nurses offered her a wheel chair to take her up. She declined each. The contraction passed and we got on the elevator.

They’re waiting for us! I’m relieved. It’s 2:15.

Jessica’s in pain. We’re in our delivery room. The nurse is asking her questions and going through medical history.

The clock is ticking. I wonder if they told them that she was dilated to 5 an hour ago? 

I remind the nurse.  She knows.

Soon the nurse checks Jessica and finds that she’s dilated to 7.

It’s getting rough for Jess. She wants an epidural.  She knows time is running out.  If you don’t get it by a certain point in labor, then it won’t work.  The window is closing.  She knows it, I know it.  “Does the nurse?”, I wonder.

I ask. Jessica insists.  The nurse is stalling.  It turns out that the delivery doctor and the anesthesiologist are doing a c-section.

They should be done, “by 3:00 or a little after”.

3:10 the doctor and anesthesiologist walk in. They start preparing the epidural.  It’s a slower process than I remember or maybe seeing your wife in real pain makes the minutes seem like hours.  The nurse and anesthesiologist help Jessica on to her side as he begins inserting the epidural line into her spine.

Bad timing.

Jessica has the most intense contraction yet just as the anesthesiologist inserts the needle into her spine. For the first time ever (and I mean ever) Jessica groans in pain. Standing there, totally useless, holding her hand I’m angry. At the climax of this episode Jessica says through her teeth, “My water just broke”. It’s 3:30.

Gradually, things get easier for Jessica. The pain of the contractions recedes as the epidural starts to work. But, the contractions don’t slow and looking at the monitor, they’re as intense as ever. Relieved at last, Jessica falls in and out of moments of sleep. As she feels better, I feel better.

At 4:10 the nurse examines Jessica for the second time. Turns out she’s fully dilated.

“No shit”, I think.

The baby is down and ready to come out. The doctor is called in and arrives a moment later. He’s still chewing his lunch. I wonder to myself if he’s one of those disciplined people that actually chews his food 32 times per bite.

For the first time all day, things make sense.  Two doctors and two nurses are in our room and they’re rushing.  It’s like the TV show now.  Highly qualified doctors and nurses with efficient, precise movements and the best equipment available.  I just try not to get in the way.

Three contractions. 7 hard pushes later and Bella Satya Smith was there.

It was perfect.

Bella Satya Smith

$6.28 for a gallon of milk

Earlier this week my wife reported that she’d spent $6.28  on a gallon of milk.    Granted it was organic milk, but still!   $6.28 seems to be a staggeringly large number and here in the farm belt… Davenport, Iowa no less.

And yet, inflation is not an issue we’re told…

Clearly the powers that be don’t shop for groceries….or read commodity reports

“Illinois corn and soybeans are up 40% and 75% from a year ago. Kansas wheat is up more than 70%. In Georgia, three-pound chickens go for record prices, up 15% from a year ago. A pound of whole wheat bread is up 24%. Whole milk, up 26%,” reports Capital & Crisis’ Chris Mayer.

The government wants us to believe that inflation is not a problem. Tell that to America’s families, who face the fastest rising food prices in more than 17 years. That’s on top of rising energy prices.

Maxim’s First Race

I wouldn’t call us “big” runners because we don’t break any land speed records.  But, my wife and I do like to run and regularly take part in a lot of local races.   5k, 10k, 5 Milers, a half marathon or two and my wife’s done a couple of marathons.   We think running is a great thing and we’re trying to pass that on to our children.

Last weekend Maxim, who’s two years old, ran in his first race.  The Quad Cities Micro Marathon 1/4 miler.   He was a little off his game since they scheduled the race during nap time (1:30 in the afternoon) but he still did a great job.   I think he’ll be doing the 1 mile race by next year.

Maxim’s First Race

Beautiful And Pregnant

My wife is due in about 5 weeks and, quite frankly, I’m starting to get excited about the arrival of my daughter. As when my wife was pregnant with my son, Maxim (who’ll be 2 years old this coming Saturday Aug. 18th), I tend to not think about the coming birth until we get pretty close.

The fact is, 9 months is a long time. Or, at least it is to me. I thrive on much shorter term goals… things that I can act on NOW. With a pregnancy I can’t do anything except take care of my wife. So, my process is to pretty much put it out of my mind completely. Now we’re close and I’m starting to let myself anticipate it.

I think Jessica recently entered a pretty serious “nesting” phase. Getting the room ready, buying baby girl clothes, etc. She’s still running. Here’s some pics of her getting ready for a 5k run this morning. She’s looking great, don’t you think?

Don’t worry inflation isn’t a problem….except

I remember having a conversation with my portfolio manager nearly two years ago about inflation.    I was telling him that despite the official numbers, it seemed to be common knowledge that inflation was running rampant.    He agreed with me that the exclusion of Food and Fuel (the only two things you need to buy) from the CPI made the numbers incredibly misleading, but we had divergent opinions about how serious the problem was.   For my part, it seemed clear that it was taking a big toll on average citizens.

Even though it’s well accepted by nearly everyone I speak with, our “leaders” keep telling us that we’re just out of touch with the economic realities.    Meeting with economic journalists last week, President Bush dismissed several polls that show Americans are down on the economy. He expressed surprise that inflation is one of the stated concerns.

“They cite inflation?” Bush asked, adding that, “I happen to believe the war has clouded a lot of people’s sense of optimism.”

That’s right, Americans are just out of touch and have a clouded “sense of optimism”.    While it’s understandable that Americans might be a little pessimistic due to the planned “generation of warfare” against the “evil doers” (who they are exactly, no one can be sure.),  I think the pessimism comes from a source much closer to home.  The grocery eisle, for example:

According to McClatchy Newspapers– The Bureau of Labor Statistics said in its July inflation report that egg prices are 33.7 percent higher than they were in July 2006. Over the same period, according to the department’s consumer price index, whole milk was up 21.1 percent; fresh chicken 8.4 percent; navel oranges 13.6 percent; apples 8.7 percent. Dried beans were up 11.5 percent, and white bread just missed double-digit growth, rising by 8.8 percent.

These numbers get lost in the broader inflation rate for all goods and services, which measured 2.4 percent for the same 12-month period. Across the economy, rising food prices were offset by falling prices for things bought at the mall: computers, cameras, clothing and shoes.

If you’re in the market for a new flat panel HTDV,  you’re in luck.  If, however, you’re trying to feed your family, fill up your gas tank or simply save for the future you’re probably feeling like stretched to the max.    Add in the recent market, credit, and housing turmoil and it can seem like the sky is falling.   Or maybe that’s just my “clouded optimism” speaking due to the 41 tragic and unnecessary deaths of US soldiers in Iraq this month so far.

Are you feeling the effects of inflation?   What impact is it having on your daily life?   I’d love to hear your comments on this important topic.

Today I Met Tommy Thompson at Starbucks

Tommy Thompson, Former Governor of Wisconsin and Secretary of Health and Human Services under Bush was in Davenport, Iowa today and I had the opportunity to briefly speak with him one-on-one.

I slept in this morning, still being a little off schedule from our trip to Utah last week, so I was late picking up my daily dose of caffeine from Starbucks. Driving into the parking lot, I noticed a two-man TV “news” crew sort of casing the joint.

I walked in, ordered my Venti Coffee as usual. Not seeing anything out of the ordinary, I got back in my car. Just as I was about to start the engine, Tommy Thompson walks out the door. Holding an Iced Latte in one hand the other pressing his motorola razr to his ear.

(Probably the only real perk of living in Iowa is the quadrennial visits from politicians.)

I jump back out of my car walk toward Tommy with my hand outstretched and say, “Tommy Thompson, how are you doing?”. He looks up at me, still talking on his phone tells the party on the other end to hold on a second, frees up his right hand and engages mine in a strong, prolonged handshake.

We had a very brief conversation what went something like this:

Me: “Tommy, It’s Nice to meet you. It’s great to see you here in Davenport.”

Tommy: “Nice, to meet you too. What’s your name?”

Me: “I’m Matthew Smith”

Tommy: repeating it back, “Matthew Smith”

Me:”You know, You’re one of the few Republicans that makes any sense. I voted for Bush before, but I’ve been really disappointed over the last couple of years.” (For the record, I voted for Bush in 2000. I think only ignorant or oblivious people voted for him in 2004. Unfortunately, the majority of voters are ignorant and/or oblivious.)

Tommy: “Me Too. What do you do, Matthew?”

Me: “I own an Internet Marketing Company.”

Tommy: “Really?…Do you have a card with you?”

Me: patting down my short pockets, “No, I don’t. I just woke up, took a shower and came to get some coffee. That’s the nice thing about an internet business… I can go to work whenever I want, where I want.”

Tommy: Looking toward his escort, “Can you get him a card?”

Me: Shaking Tommy’s hand again. “Thanks, I just thought I should say hello. I really appreciate you being here.”

Tommy: “Thank you, and thanks for coming up and talking to me”

That was pretty much it. It was clear he was busy. I didn’t want to disturb him any more than I already had. His aide handed me a business card and said, if I’d like to help out send him an email.

Looking back I wish I would have asked a couple of questions and expressed my opinion on the direction of the country. But, it was all spur of the moment and I’ll just accept as what it was.

If you’ve ever read the book “Blink”, you know that people create near instant impressions of others. Even though I had only 30 seconds of his time, I was left with a very favorable impression of him.

Tommy2008.com