More Signs of Inflation

Inflation continues to gain speed and cause problems in the market.

The highest inflation-adjusted borrowing costs since the 1980s are hindering U.S. companies’ ability to build their businesses.

Customers of Airgas Inc. are reducing purchases of industrial gases such as nitrogen and acetylene because of rising real interest rates, said Chief Executive Officer Peter McCausland. Real rates account for inflation or deflation.

“There is no question” high real rates have aggravated Airgas’s sales decline, he said in an interview.

You will start hearing more and more about "crowding out" of private investment cause the government sector will be lapping up all the available credit in the market.

Rising real yields may deter companies from borrowing to invest in new products or factories because deflation will erode cash flow and make it harder to service debt, said John Lonski, chief economist at Moody’s Capital Markets Group in New York.

“That’s almost guaranteed to delay an economic recovery and perhaps very much risks intensifying the current economic slump,” Lonski said in a telephone interview.

Get ready for high inflation and high unemployment. During the Carter years we called it stagflation. Well, here we go again.

China's Inflation Spinning Out of Control

While it's nothing close to approaching Zimbabwe levels, the inflation in China is starting to spin out of control.

Chinese inflation hit an 11-year high in January after rising price pressures were exaggerated by fierce snow storms, official figures show.

Soaring food prices were largely blamed for pushing consumer inflation up to 7.1% last month, from 6.5% in December.

Inflation in China continues to rise despite higher interest rates and other measures by Beijing to keep the economy from overheating.

This is interesting to watch, as the the media savants seem to think only capitalism can have economic problems. So how is the standard of living in the leftwing dreamland known as Communist China?

Chinese leaders have been under pressure to control spiralling food costs, the biggest factor behind historical periods of social unrest in a country where according to the World Bank 300 million people live in poverty.

Yes, you read that properly: 300 million people in poverty, and we are not talking about having to cut off the cable TV here. We are talking serious poverty.

So what are Chinese authorities to do?

Last year, the government also raised interest rates six times in an attempt to keep inflation under control.

Analysts said in light of the latest figures they expected further interest rate rises.

Notice how a story written by socialists about communists does not mention increasing in productivity as a viable option.

Media Recoils at Good Economic News

Here's some economic data that should enrage the anti-U.S. mainstream media.

Inflation remains moderate in July

WASHINGTON (MarketWatch) -- Inflation remained cool while household incomes and spending strengthened in July, before market turmoil in August shook Wall Street and Fed policymakers, according to Commerce Department figures released Friday.

Inflation was milder than expected in July, with total inflation rising 0.1%, matching the 0.1% gain for core inflation excluding food and energy costs.

In the past year, the Federal Reserve's preferred measure of core inflation has risen 1.9%, just within the Fed's unofficial target zone of 1% to 2%.

Total consumer inflation (including all items) was 2.1% over the past year.

I would expect the Fed's to further ease the Fed Funds rate via open market operations to expand the money supply. Yes, there are real concerns out there about failed loans and the housing market, but it's not exactly "buddy can you spare a dime" time yet.

Incomes are still growing, although you don't want to read too much into monthly macroeconomic figures.

All told, the figures suggest that consumers were in generally good shape before the credit crunch in August sent financial markets reeling, forcing the Fed to conclude that risks of slower growth had risen substantially.

Expect a flurry of negative articles from the MSM predicting economic destruction to counter the actual real good news out there.

China Inflation at 10-Year High

China inflation hits 10-year high

Chinese inflation soared to a 10-year high of 5.6% in July, led by a sharp increase in food prices.

The price of pork and other meats jumped 45% compared with the same month a year earlier, while eggs rose 31%.

July's annual inflation rate was the highest since February 1997, and was up from June's rate of 4.4%.

The latest inflation figure is likely to mean more Chinese interest rate rises. Rates have already risen three times in the past six months.

Watch out for some drastic moves by the Chinese government to control this.

Chinese authorities have also ordered investigations into whether farmers or food companies are colluding to push up prices.

I can imagine what those "investigations" will consist of.

This also means that you can stop worrying that China will start dumping dollars. They will hold onto foreign currency that keeps it's value.