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The U.S. government had been telling the American citizen for several decades now that there is no inflation in the American economy.
Of course, Americans know this isn’t true. Oil prices rose from $15/barrel to $150/barrel in twenty years. Housing prices jumped 150-500% is three years, after averaging an appreciation of 2.5% per year over a century. Health care costs explode year after year, averaging 9.5% growth, year-over-year for the last decade. The cost of college tuition has gone up by almost 1000% in thirty years. And we are told that there is no inflation.
It finally became clear to me, after years of musing on this phenomenon, that, there is no inflation, according to government statistics, as long as there is no wage inflation. And there has been little wage inflation – that is true. As long as wages stay low and do not chase the escalating costs of goods and services – and this is almost possible if the cost of credit stays low -- then the inflation spiral is muted. Of course, the consumer, in this scenario, becomes more and more indebted through this method of paying for myriad inflationary goods and materials. Apparently there is no moral dilemma in this. Business profits grow, wages remain low, and workers take on more and more debt. It sounds to me like a volcano that is bound to blow. But what do I know? I’m not an economist. Sometimes logic is only logic for those not sophisticated enough to know the difference between appearance and reality.
Interesting ... (and longish) ...