Charting the Economy

8/6/2019 Charting the Economy

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Charting the Economy

A Research Project Covering the Last Ten Years of the US Economy

Copyright 2011 by Robert KientzPage1


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Table O f C ontents

Part 1: EmploymentPart 2: GOP, Wages, and WealthPart 3: Money SupplyPart 4: InflationPart 5: DebtPart 6: Stocks and Commodities

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Page 4Page 15Page 28Page 41Page 48Page 53


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I ntrod uc tion

Understanding the USeconomy is no easy task. Economic measurements involve manycomplicated relationships of voluminous data. The truth is, most people do not read largeeconomic textbooks in their spare time. They rely on media and government, in sound biteformat, to tell them what is going on in the economy and to guide their investment strategies.Because the temptation for central control over information is so great, I believe articles such

as this one are important in shining an independent light on our economic condition and inidentifying crucial trends for our future.

They say a picture is worth a thousand words. So, let us explore our economy of the last 10years through charts. We'll start from employment and continue to other important areas ofthe economy. By the time you finish reading this, you will feel much more confident in yourknowledge of economic trends and how to use those trends to your advantage.

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Part 1: Employment

138000

1360DO

1 3 4 0 0 0

1 3 2 0 0 0

130000

1 2 8 t l D O

1 2 6 0 0 0

N ! o n F a l r m P a y r o U s ] Y e a r E n d/ ~...-I-

...- - -- - -- ~- r- - - - ~..-

- - r- r- - - - r- r- r---

- - r- r- - - - F- F- e--- - l- f- - - - f- f-~~. . . ~ .._ .._ - ~ - .._ ~ ~

2001 2002 2 0 0 3 2004 2005 2006 2007 2008 2009 20]0

Source: BLS.All numbers are in thousands.

From the first graph, we note that total non-farm payrolls have fallen since 2001.

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Government jobs are up over 4% and private payrolls are down about 1% for the decade.Because private payrolls are larger than government payrolls, the net is a loss of jobs in theeconomy.

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Next we note which categories gained the most jobs, and which lost the most jobs. Privateservices, education, government, and leisure and hospitality had the biggest gains.

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Construction, manufacturing, durable and non-durable goods, trade and transportation, andinformation dropped the most. This clearly signals that the productive capacity of our economyis being lost which will increase our trade deficit.

Job gains show that government spending is up. Private services and leisure and hospitalityshow that those who still have jobs are spending more on leisure items, indicating a growingdisparity between the haves and have nots.

Professional and Business Services showed a positive gain of 5%. Half of that (2.5%) came in thelast year, and 73% of the last year's gain was in temporary workers. This suggests that while thecategory is growing, recent growth are not permanent jobs. Time will tell if these temporaryworkers are converted to full time workers.

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Percentage-wise, manufacturing, goods, and information lost about 25% of their jobs in the last10 years. Construction lost 19% of jobs over that time span.

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On a good note, mining and logging is up 22% over the decade, signaling at least a very smallportion of productive capacity of the country is not declining. However, mining and logging is avery small portion of the overall jobs economy in the US.

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Examining Trade, Transportation, and Utilities in more detail, we find that during 2010, thesector is relatively flat, up only 0.7% from the year before.

TlraiClleJTlranSlPorationJ and Utillitiies27000 ----'.> -,- - ~ - .- - - _".,.,- -," - - - - - -265C1U

26000

2551(10

25000'

24500

24DCO

2351(10

29C1DO20:01 200.2 200.3 2004 20005 2C107 200.8 2009 20:l!O

Within this sector, wholesale and retail trade, along with utilities, had almost no noticeablemovements. The increase in the nusector came almost completely from transportation andwarehousing jobs, up 2%. Along with the manufacturing and trade categories, this seems toconfirm the thesis of an inventory ramp-up, but not a retail, consumer-driven economicrecovery.

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Trallisportatiiofll arndWa~ehoUlsing460'1] ~"-: - .-: \

- .: \/- . . .


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We break down employment versus population changes by age category. Note the largeincreases of baby boomers versus the relative flat Generation X and Millenials by population.During the same time frame, those baby boomers have been taking more and more of theavailable jobs while the younger groups are suffering higher unemployment. And as they retire,the baby boomers will put more pressure on entitlement programs that cannot be funded bythe smaller Generation X and Millenials.

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More interestingly, those 65 and above are taking a much higher proportion of jobs than theirpopulation increase, suggesting many of the retired are moving back into the workforce at theexpense of the younger generations.

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Wages By Age G roupThe biggest increases came for the more experienced workers. Given our entitlement spendingproblem, it appears the only way we balance the budget is to tax those closest to receiving thebenefits more (because nobody else can afford it), or drastically cut programs.

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Part 2: GDP, Wages, and Wealth

The first chart shows GDP gains for the USsince 2001.

GDP Gain s45.00%

35.00%

30.00%

25.00%

20.00%

15.0.0%

10.00%

s . o o s s

.0. .0.0%2001 2 .002 200'3 2004 2005 20.06 2007 2008 2009 20'10

Source: Bureau of Economic Analysis

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The biggest raise comes in government, followed by other services, services, and privateindustries. 'Other services' includes information, finance, real estate, scientific, professional,education, healthcare, and technical. Manufacturing wages fell (along with available jobs), andgoods producing industries stayed stagnant. The service industry and government workers areclearly taking home larger portions of the wage pie.

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GOP has risen strongly compared to population, suggesting great efficiency gains. Since weknow overall employment has remained flat-lined for the decade, we should be able to make a1:1 comparison in wages to GOP.

When taken together, the percentage increase in population * the percentage increase inwages equals the percentage increase in GOP.

~I?op'u latto n.W,age:s;.and Seler+e s

Wages, Population. and GDtF'

.GI!lP

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Overall wage changes and percentage attained by age grouping.

Source: BLS

The highest 20% of the population make about half of all income. The top 5 percent make 21% bythemselves. The top 5% lost a very modest amount of income to the rest of the top 40% in the last tenyears, but by and large the last 10 years have maintained the status quo.

Source: Census

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This chart shows that the lowest 60% of earners have lost significant portion of the aggregateincome in the US,while the top 20% and top 5% have seen monstrous share increases.Interestingly, the fastest rate of change in income changes for all groups came between 1986and 1996, when higher income earners captured more of the total aggregate income than atany other time since 1967.

While total wages multiplied by total population has kept up with total GDP, the aggregateshare of the national income has not.

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The chart shows that because the lowest 40% of earners cannot increase their share ofaggregate income, their rates of poverty increase. Inflation is stealing away their purchasingpower and putting them in the poor house.

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The chart is in thousands. We can see that the bottom 50% of people have not grown their networth measurably. The top 10 percent have tripled their net worth. The chart shows that thewealth affect, or the ability of existing assets to multiply wealth over time at an exponentialrate, has left a severely deepening gulf between the haves and have nots.

This data, of course, ignores the movement amongst the classes. But it does show that thosewith assets are more easily able to multiply it to create wealth for their families.

Source: Federal Reserve 2007 Survey of Consumer Finances

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We can see the poorer brackets have primarily cash accounts and retirement accounts, whilehaving small percentages of CDs, savings bonds, and life insurance. Higher brackets have alarger mix of financial assets, likely due to having more money to purchase various assets with.

Note: Bonds had less than 10 responses for all but the highest bracket.

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Ownership of stock from 1989 to 2007 greatly increased for income brackets 40% and up, likelydue to increase participation in 401k type retirement plans. The lowest 40% of incomes did notincrease their participation in stocks substantially during the time period.

511J.0

l-

e--

~

e-r" I""

i .. ..JI'I - ...l1 . .d].=.-I U L . . d = - - - ~.Le~~Th'ln 20%

Stock Held by Income Bracket, in Thousands250..0

200,0

150.0

10.0.0

.20-9.,9%

.40-59.9%

.60-79.9%

.80-89.9%

.9(1-1(10%

0.019.89 1992 1995 1998 2001 2004 2(107

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Prim ary resid ences and bu siness equ ity m ake u p the m ajority of o ther assets held by fam ilies.

"Non- financia l" Assets For All Famil ies , Percent o f Whole60.0

IVehicles P r im a ry R e s id en ce s .I O th e r R e si de n t. el P ro p er tyI E q u it y I n No n r e, id e n li a l P r op e rt yI B u~ in e ~sEquityIIother

50.0

40.0

30.0

20.0

10.0

001989 1992 1995 199B 20m 2004 2007

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Checking accounts, interest bearing bank accounts and CDs, stocks and retirement accounts,primary residences, and cars make up the majority of 'financial assets' held by the public, as perthe census.

A s se tOw ne rs hip R ate s B y A g e G ro up

Source: Census

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tes s Ih an 3 5 Ye ars135104414510541 55to 64165andLip1651069170 -74175 andover


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The largest debt is the primary residence, and the percentage equity of all owners has dropped9% from 1989 to 2007. Other debt tied to residential property has risen 32% over that timeframe (equity loans). Credit card balances jumped 21% in that same time frame, while lines ofunsecured credit dropped 38%.

The leverage ratio shows that the poorest use the most debt per their income. Because theirshare of income is so small, any debts carried inhibit their ability to increase their net worth.

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There is really no point in putting specific investments here. Based upon existing net worthstats, it is clear that no current class of workers are financially prepared for retirement. Thismeans we can expect additional dependence on social security and for retirees to continueworking past the age of 65 to make ends meet. Even if these numbers had doubled since 2004(an extremely unlikely scenario), workers would simply not have nearly enough to retire onwithout substantial assistance required. Most estimates of minimum retirement nest eggs startin the millions of dollars.

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Part 3: Money Supply

Our opening chart looks at the broadest measures of cash and credit in the U.S. money supply,M2 and M3. We can see that both measures have been expanding this decade. Note: TheFederal Reserve stopped reporting on M3 after 2006 due to what it considered low importanceto the measurement of money in the system.

M3 is the broadest measure of money and credit in the U.S. It consists of credit, savings, andcash in the system. For our purposes, we want to examine those elements of U.S. monetarymeasures that are inflationary and affect the prices of goods that people buy every day.

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The following chart shows the pieces of M3 that are not included in M2, for a look at how theyspecifically are expanding. These non-M2 components of M3 include large time deposits,repurchase agreements, eurodollars, and money funds.

I':] Thrne _[)ep8siV!;D aeccr chese A.gr>eenlelmts.

Chamge iin Non-M12 COlmpOtrnents of M32500 ~~------------------------------------------------------

D M:Dll lev Pumd s NiO\I;J-M2 -r :v1i3 Oven'llil

-5101]1, ----------------------------------------------------------

In addition, M2 also has some credit components in addition to cash. So we can examine howthose specific parts of M2 are expanding. Deposits moved out of the money markets and CDsand moved into savings accounts. People want liquidity while avoiding risk.

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Ml is the leanest measure of money and credit in the U.S.system. It includes currency itselfplus traveler's checks, demand deposits, and other checkable deposits. Ml by itself, however,does not measure all inflationary money in the system that will affect prices. More on thatlater.

Most of the increase in Ml, about 53%, is in currency in circulation. Most of the rest is indeposit accounts, including checking accounts. Currency circulation is up about 6 % from 2001,suggesting more is being spent and less is being saved from 10 years ago.

Ml, M2, and M3 have shown that people are moving away from risk and into liquidity and"safe" returns.

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Austrian True Money Supply (TMS)

True Money Supply, or TMS, is an Austrian economist's tool for measuring "medium ofexchange" and does not double-count money in the system. Any money measurement that isthe result of a credit transaction requiring selling of one asset to produce money is excluded,and any measures requiring a lapse in time (not immediately available) are excluded becausethey result in those time-lapse deposits being lent out and not stored in the banks' vaults. Inaddition, TMS includes non-M3 money measures of U.S. government demand deposits,demand deposits due to foreign commercial banks, and demand deposits due to foreign officialinstitutions.

- T M S~ I M 1- I M 2 :. . . 1 ~ 1 3

Tf'ueM0fley 9upply (TMS)v'S~, M1 lItoney 3toclkvs. f ! 1 2 Money Stoc!kvs, 1 '1 '3Money 5tocJI~.

S~I!I~IH b J J ! r J I j I ! , ' 0100 Hi~~$ ln~Mtllt.~

!MLUIoe I~ 1- 1 , 1 1 1 I.:IC1 . 0 1 .I

~ 16 !Is-'1U I-. .~I[i MLU! i ; ; o1;iU

~ .~ ~ ; ; ; r 1 ig .~ ~ ~' ~o0 0. e- o 0 0 ~ 1 o 0-(',l IN ~ IN leN (NI N N

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TMS shows that we have had a substantial increase in money supply as a medium of exchange,which will more accurately reflect those amounts that can be spent on demand, and thereforeare inflationary to the economy. As a corollary, the difference between TMS and M3 moneymeasures represents those credit transactions in which money has been promised but is notheld in vault.

For example, if a corporation wants its securities back from a repurchase agreement, it mustcome up with cash from another transaction -- sales of goods, issues of stock, or loans fromother sources. If it had the cash on hand, it would not have pledged assets to obtain cash. Theseare exchanges of future production for current income. They may be temporarily inflationarywhen the money is spent, but this is a one-time proposition limited by future production, andnot a continual inflation of the money supply.

U .S . D ollar Index

A popular measure of the U.S. dollar is the U.S. Dollar Index. This index puts the dollar against abasket of other popular currencies, including the euro, British pound, Japanese yen, Canadiandollar, Swedish krona, and Swiss franc. Each currency is weighted differently against the dollar,with the euro having by far the largest weighting. This is an attempt to value the dollar againstother popular currencies, though some very important currencies were left out of the index.

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We can see that the U.S. Dollar Index is falling, meaning that the U.S. dollar is devaluing fasterthan the overall basket of currencies included in the U.S. Dollar Index.

The next chart examines Austrian TMS versus the U.S. Dollar Index to see if the U.S. Dollar Indexis a good measurement of U.S. dollar strength.

Set to a reference value of 1 in 2001, this chart shows that the TMS has grown 84% by 2009while the dollar, weighted against other currencies, has only fallen about 30% in value relativeto other currencies measured in the U.S. Dollar Index. All currencies in the USD Index areinflating, and so therefore the USD Index should not be used as a measure of purchasing powerfor the dollar itself. The phrase "it's all relative" applies here.

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I set up the following chart to compare the USD Index, TMS, and M2 together. M2 is popularlyused as a measure of the inflationary effects of the dollar, or the amount of currency incirculation and savings that would apply to the purchasing power of the dollar.

US Do l l i l l a r I ndex, TM lS , a n d M22

L6

14

U S D olla r In de x. nAS(J M 2

1

0.8

0 ..6

04

0 .2

o2 < 0 0 1 2 0 0 2 2003 20()4 2005 2006 2()U7 2008 2009

The USD loses 30%, compared to a TMS increase of 84% and M2 increase of 56% since 2001.M2, in this case, understates the real medium of exchange value of money growth in the U.S. by28% since 2001. So when you see M2 used in economic analysis, remember that it does notinclude all the measures of money that can cause a subsequent inflation in prices, or reductionin consumer purchasing power.

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O ther World C urrencies

To compare the dollar against other currencies, it is helpful to find corresponding values inthose currencies. Here we look at the different measurements of the euro.

The euro measures are composed thusly:

Ml: Currency in circulation + overnight deposits

M2: Ml + deposits with an agreed maturity up to two years + deposits redeemable at a periodof notice up to four months.M3: M2 + repurchase agreements + money market fund (MMF) shares/units + debt securitiesup to two years.

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The closest comparison to TMS in euro measures would be Ml, because M2 and M3 includetime deposits and credit transactions.

The euro rate has exploded past the dollar starting in 2005. Euro issuance has increased by102% since 2001, compared to the U.S.TMS of 84% and M2 of 56%.

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Japan M1 is closest measure to TMS, excluding savings accounts which are part of M2. OtherM2 data includes time deposits and credit transactions. M1 increased by 45% while M2 onlyincreased by 15%.

T M S v s E l l . J ll roM I v s J a p a n M i l2. 5

ITMSIEu r oM lt ]Jaj lad l Ml

1.5

0. 5

o. 2 0 0 1 20 m 2 0 0 3 2004 2 0 0 5 2006 2 0 0 7 2008 2 0 0 9

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Here we see the Austrian TMS against four major currencies in the U.S. Dollar Index basket (byweighting).

USTMS vs. us Dollar Index Basket Top 4

15 .TMS.Euro-MlDJapan Ml.British MO~ Canadian M2

0.5

ZO.o1 2(102 20,03 :1:004 2005 2006 2UO? 200B 2.009

The euro is the highest-weighted currency in the USD Index basket, and has depreciated invalue more than the dollar, which has allowed the dollar to appear less devalued than it is.Again, the USD Index is not a measure of purchasing power, as all currencies in the basket havebeen inflated.

Note: Reporting on British MO, the closest measure of the two made available to actual moneyin the system stopped in 2006. The British money measures were the following:

MO: Cash outside Bank of England + banks' operational deposits with Bank of England. (Nolonger published.)

M4: Cash outside banks (i.e. in circulation with the public and non-bank firms) + private-sectorretail bank and building society deposits + private-sector wholesale bank and building societydeposits and certificate of deposit.

M4 is a poor substitute for actual inflationary money supply, so I did not graph it.

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ChinaChina is a large trading partner of the U.S., and currently holds the most Treasury debt behindthe Federal Reserve. Therefore, China's currency strength is an important factor in how the U.S.trades with it and how much debt the Chinese can afford to buy from the U.S.

China has been inflating money supply to support its rapid economic expansion. It appears asthough it is very vulnerable to rising prices resulting from currency inflation. Japan has thelowest rates of currency inflation since 2001 as it tries to keep exports competitive.

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Lastly, we have U.S. Austrian TMS versus other major currencies.

TMS vs. Other Major Currencies

4

.US. TMS

2001 2002 2003 20D4 2Q05 20D6 2007 2Q08 2009

Eur-c Ml

.British MO Canad ian M2

Notice China has been printing Renminbi at a faster pace this decade than the dollar or euro.When researching for this project, this was quite a shock. While China's currency is not a worldreserve currency as the U.S. dollar is, the Chinese are following the same path the U.S. has. Thispiece of data reinforces the idea that at least part of China's economy is in a fiat money-induced bubble, which is a topic for another article.

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Pa rt 4 : In fla tio n

The first chart shows the Personal Consumption Price Index from the Bureau of EconomicAnalysis. Categories are shown grouped by color. The overall price index change for the groupwill be designated with "all" in the category name.

The inferences that we can make from the BEAprice indexes are limited in that itemsubstitutions may affect the price indexes from one period to the next (much like CPI). Howeverwe should be able to infer trends for those categories overall. In this graph we just plot themajor changes in either direction against the sum of all index changes.

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From this chart, we see that the largest reduction in price index occurred in recreational goodsand vehicles, and that the largest increase was in gas and energy goods. Services as a wholeincreased more than the net value of all peE index value changes. Durable goods, not shown,had the least amount of positive change (inflation) in index values, which include motorvehicles and durable household equipment.

Food, housing, transportation and energy are the three most important monthly budget itemsfor most families. Energy prices almost doubled over the last decade and rose three times asfast as wages over the same timeframe. Food increased by over 33%, outpacing wages by 4%.

Because the BEA notes the indexes are limited by substitution effects, we search for moreaccurate measures of price inflation.

We can look at the BLSInflation data, as graphed below. The first graph has some of theessential budget items.

Inf~ationRates Since 2001as.ccee

5.00%

-

- - I - I - _ c - I _ _- - -- -- - -- -- -- -- -- ,'f- --- - -- -r"I2003 ,

- r"I ., . . . . . . - , -2002U 2004 20.05 . . 2006 2007 200S 20U9 2010 - AU Items10.00%

F C I- I: J -d an d Seve .-age.s~ 'rrensaortet [en

0.00% Housing

... Appare

-5.00%

-10.00%

-'15.00%

Look at the nice smooth curve in housing inflation, which started slowing in 2005 and hasn'tstopped. Most of the values are below 5%, with transportation jumping around the most.

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Energy items are specifically graphed below.

Fuel oil and gasoline have risen the most. All items since 2001 graphed below.

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Inflation kicked up quite a bit in energy factors, which is telling of why the BLSdoes not includeit in the core inflation. And even though gasoline plunged once, it is back up to much higherlevels this year. This indicates that speculation is not the only factor driving oil prices. Fuel oilhas almost tripled.

Of course we know that some of the BLSfigures are largely BS,due to hedonic, geometricweighting and substitution affects. Since energy items have harder substitutes, we canreasonably rely on those from the BLS.But we'll need to find substitutes for the housing, foodand other categories.

As luck would have it, MIT professors have created the Billion Price Project. The project pullsdata from online sources for supermarkets, electronics, apparel, furniture and real estate.

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The project started in 2008, so we can use its data from that time in comparison withcomparable BLSvalues.

MIT's Billion Price Project, which includes data on food and beverages, apparel and housing,shows significantly more inflation since 2008 than does the BLSmeasures in these areas. Whilenot a 1for 1comparison between BPPand the BLSmeasures, nonetheless the difference issubstantial enough to show that BLSfigures don't reflect actual price data.

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Another notable inflation statistic is tracked by economist John Williams. His website tracksseveral economic variables using methods previously used by the U.S. government. However,the measurements now used by the BLShave been significantly modified over time.

Here we see his inflation measurement, representing the way the U.S. government used tokeep it, versus the new inflation measure.

Courtesy of Shadowstats.com

We have successfully used alternate inflation measures to show that the BLSdata is not soundand does not reflect the prices that consumers face every day in America.

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As we can see, the Austrian True Money Supply (TMS) as a measure of inflationary currencytracks the Shadowstats inflation rate very well. We can also see by this chart about an 18 -24month lag time between TMS movements, and the resulting price movements in Shadowstatsprice inflation. Starting values for both measures were set to 100 index.

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Part 5: Debt

USdebt has increased 2.5 times since the start of the decade, but the interest expense has notincreased by the same amount. The low interest rate allows debt creation to soar to dangerouslevels. The major risk here is that if interest rates rise, the UScould face not being able to paythe debt service. Inflation can help with paying off long term debt, but short term debt is muchharder to rollover in an environment of rising rates.

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Low interest demanded by creditors have allowed the USto borrow it's way to potentialeconomic insolvency.

Debt has caught up to GDP in early 2011. The growth rates of debt are stunning, and prove thatadditional debt does not automatically increase production.

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Kenneth Rogoff and Carmen Reinhart, in their book This Time Is Different, note that when debtexceeds 90% of GOP historically, growth rates in that country slow 2% over countries withlower debt thresholds. When debts reach 100% of GOP,default is much more likely. The USisfacing this dynamic even as official budget projections forecast GOPincreases for the nextseveral years.

Typically, countries experiencing greater than 20% inflation also have a higher chance ofdefaulting on debt. The USis not quite there yet.

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Here is why US borrowing costs are rising, as shown in the previous chart. We can see that afterthe financial crisis, rates that had jumped up from previous years had fallen again. The publicbought into stabilization of USdebt. The rates are beginning to rise again, though not as muchon the shorter issues. The public obviously feels there is much risk on the horizon, but not inthe immediate term.

However, shorter term securities have leveled out in 2011 and it would not be a surprise to seethem jump as well, if the economic conditions do not improve. If short term rates rise, thiscould make it very difficult for the USto finance its debt. The Federal Reserve would have tocontinue to pump freshly printed currency into the system, risking hyperinflation.

Note: The USdid not issue 30 year Treasuries for 2003 - 2005.

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The Federal Reserve bank, known as the central bank of the US, has twice in the past few yearsvaulted to the top as owners of Treasury debt. Once during the mortgage meltdown and againas the economic recession in America continues.

This process of central bank buying debt is called monetizing the debt, and is often one of thefinal warning signs of debt collapse. China and Japan have been slowly deleveraging out of USdebt and building portfolios of hard assets such as commodities. The market for USdebt paperis increasingly falling to the Federal Reserve to fund. The USis running large budget deficits,which puts increasing pressure on additional yearly borrowing to make the difference up.

Because rolling over previous debts requires new debts to be created, it will be interesting tosee if anyone else has the capacity and willingness to take on additional US IOUs. No suitorshave volunteered and there may not be any capable to do so.

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Part 6: S tocks and Commodities

Stocks have been up and down, but overall are at about the same level as they were ten yearsago.

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Commodities prices have been rising since 2002.

The CCI(Continous Commodity Index) is comprised of:

17.64% Energy17.64% Grains11.76% Livestock29.4% Soft goods (sugar, cotton, cocoa, etc ..)23.52% Metals (gold, silver, copper, etc ..)

We can see that commodities prices are rising, which results from monetary inflation.Consumers will pay more for the same goods.

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Gold has had a m assive run up in the last decade.

Gold Price1600.00

600.00

-__ ""l _ .,.

IIJIiiI _ .-.. _ ."-

1400.00

1200.00

1000.00

800.00

400.00

200.00

0.002001 2002 20U;; 2004 2005 2006 2007 2008 2009 2010 2011

Silver is not far behind.

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If commodities are rising so quickly, how do they compare with wages and inflation in general?

We can see that wages have not grown as fast as commodities prices, or inflation rates.Therefore, it is easy to surmise that purchasing power is declining. In addition, note that for abrief period in 2008, commodities have risen steadily and the most. We can expect, becauseend consumer prices rise after producer price inputs (commodities), that the CCIindex ispredicting what our inflation rates will look like in the future.

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In the following chart, we see how the prices of things are related to the increase in the moneysupply. The prices are highly correlated to the increase in money supply, as measured by TMS.

You have completed your journey through the USeconomy of the last decade. I hope you foundthe information fruitful. The information contained herein is owned by Robert Kientz, whoretains all copyrights to the material. You are free to distribute the piece to anyone you choose,

Charting the Economy

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