Tag Archive for: decline

Real Wages Declined 0.5% in October Amid Mounting Inflation

Wages rose 0.4 percent in October. That’s good news, right? Not so fast.

New inflation data reveal that despite nominal gains, Americans’ real wages actually declined last month.

The latest Consumer Price Index shows that consumer prices rose 6.2 percent from October 2020 to October 2021—the highest price inflation level in more than 30 years. In particular, necessities such as food, fuel, and used vehicles saw stark price increases. On a one-month basis, from September 2021 to October 2021, prices rose 0.9 percent—significantly more than wages.

So, even though wages nominally increased, real purchasing power has declined. That’s right: Americans may think they’ve gotten a raise, but they actually got a pay cut.

“All told, real average hourly earnings when accounting for inflation, actually decreased 0.5% for the month,” CNBC reports. “So an apparent solid paycheck increase actually turned into a decrease, and another setback for workers still struggling to shake off the effects of the Covid pandemic.”

This is more than just bad news. The troubling inflation trend also reminds us why we mustn’t fall for what economists call the “money illusion.” As economist Peter Jacobsen has explained for FEE.org, what matters is not the number on your paycheck but what you can buy with it.

“This concept is called your real wage,” Jacobsen writes. “If you offer someone a larger number on their paycheck, but then tell them the larger number comes with the caveat that they’ll be able to buy fewer goods and services in the present and future, they’d be a fool to take the deal.”

Politicians, including President Biden, are quick to point to the fact that nominal wages are rising:

They have every incentive to try to take credit for rising paychecks, after all. But voters shouldn’t fall for this rhetorical sleight-of-hand. As this week’s ugly inflation numbers show, real wages are falling—thanks to the government’s poor policy making.


Brad Polumbo

Brad Polumbo (@Brad_Polumbo) is a libertarian-conservative journalist and Policy Correspondent at the Foundation for Economic Education.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

VIDEO: The U.S. Military is Shrinking — the Numbers are Alarming

President Obama has fundamentally transformed the United States military from a global fighting force into a social change petri dish incapable of dealing with growing global threats from the nation states Russia, China, Iran and North Korea and even the Islamic State JV team.

The Middle East is exploding because the Obama foreign policy is based upon smart power rather than real power.

The Obama administration now seeks dialogue and engagement with those who wish to do us harm. Negotiation is part of diplomacy. What Americans see is our stature decline in an ever more dangerous world. What are enemies see is an opportunity to advance their national interests at the expense of America.

The below video by Dennis Michael Lynch explains the decline and fall of the U.S. military by the numbers and from a historical perspective.

Today our U.S. Air Force pilots are flying aircraft that are older than they are. Today the sea born U.S. Navy is commanded by officers who are much younger than the ships under their command.

Watch this short NEWSMAX TV analysis of our incredibly shrinking military:

American president Theodore Roosevelt, in a letter to Henry L. Sprague of the N.Y. City Union League Club dated January 26th, 1900, wrote, “Speak softly and carry a big stick; you will go far.” This proverb advises using the tactic of caution and non-aggression, backed up by the ability to do violence if required. This proverb became Roosevelt’s foreign policy.

The greatest challenge for the next president will be restoring America’s big stick. 


Donald Trump Has a Coherent, Realist Foreign Policy

It’s a Crazy, Crazy World out There

Is the U.S. dollar really getting stronger?

You’ve probably heard that the dollar is getting stronger against other currencies these days. Short sighted investors are pretending this means that the USD will never fall as long as they walk the earth.

They look at this short term growth in the dollar against other deeply troubled currencies and crow that the good old USA is as sound economically as ever. Further, they bad mouth perceptive deep economic analysts like Tyler Durden, for example, calling them every foul name in the book, but —  aside from supplying short term charts and out-of-date commentaries — without providing a single fact to prove that those analysts are wrong. To top it off, many of them cheekily call themselves ‘conservatives’ and quote other establishment conservatives-in-name-only to prove their points. This creates the mistaken but indelible impression among some thinking people that conservatives are hopelessly naïve. Yet deep analysts are edged out of the field and forced to publish their own commentaries on the web. In this regard, these dollar bulls are the spitting image of the Russophobes, who also practice desperate ad hominem attacks with a breath taking lack of logic, facts and gray matter. I often wonder what would happen if they had to deal with a populace having as much understanding of macroeconomics as they have of household  budgets – an understanding matching their chronological age — instead of a gaggle of silly teenagers in adult bodies.

There is an unwritten rule in the West that as long as no one notices that the emperor is naked, then he is not. Woe unto anyone who dares suggest otherwise, for there is an unwritten ban on speaking negatively about the US economy.

What these poor souls forget, and want us to forget, is that the dollar is only getting strong against other ‘Western’ currencies (I use quotes there as I am including the Japanese yen in that, Japan being clearly within the US sphere of influence.)

But there is a bullet train headed right for the USD bull market and its initials are RMB (renminbi, or the yuan).

You might want to get off the track. Either that or get on track number CNY (Forex ticker name for Chinese yuan).

Here is what Bloomberg says about this trend:

“The average Chinese Yuan conversion rate over the last 12 months was 6.15. The average rate over the last 10 years was 7.01.  A lower Chinese Yuan to U.S. Dollars exchange rate over the last 12 months compared to the average currency rates over the last 10 years serve as an indicator that the long term rate trend in CNY/USD is down (weakening US Dollar against the Chinese)…

Did you get that? The dollar is weakening against a currency in a country that does not play Ponzi games with its currency. Or in other words, a country that is run by adults. So why is the US dollar so strong against the euro, for example? If you need to ask, you will not pass Economics 101, but here ya go in case you need it.

Answer: The US-imposed sanctions against Russia and their fallout, including Russia’s own sanctions against the EU. For example, I was reading several months ago on a Greek site that the Greeks are suffering heavy economic losses because Russia is no longer buying their fruit. Of course, if Greece were to drop out of the euro zone, that would bring back their Russian clientele and pretty much fix everything else for them (although not enough Greeks seem to have thought of that option yet or want to stay on what they perceive as a potential gravy train). Now, as you also may realize, left-wing political party Syriza is gaining ground among Greeks and is anti-austerity. That is very close to being anti-EU and it is a sign that, while the Greeks may not be ready to exit the EU (so-called Grexit), they are tired of taking orders from Brussels to be poor and like it. If Greece wakes up and notices that the anti-Russia sanctions are cutting considerably into their GDP, and that exiting the EU and defaulting on their debt would give them some much-needed breathing room, we could see a revolt, which would in turn trigger revolts EU-wide, ultimately driving the last nail in the EU coffin. The problem is, the EU probably can ill afford to make all the anti-austerity parties in Europe happy enough to keep them from going over the edge. They are already extended to the max. Besides, if the EU Masters ease up on Greek austerity, then they must do the same for others. At some point they would be reliant on the lender of last resort, China. But China would want a serious quid pro quo, quite likely the end of anti-Russian sanctions.

But I digress. My thesis in this commentary is that the optimism over the dollar’s apparent strengthening as against Western currencies is justified only if we ignore the Chinese yuan, the only serious challenger and of course, the one no one is watching.

As I pointed out before, based in large part on my translation of an absolutely seminal interview with China’s top monetary policy expert Chen Yulu, the USD is falling against the RMB simply because China has a real economy based on diversified manufactured goods and service offerings, while the US is a debt-based economy whose government has long been unable to pay its bills out of receipts, resorting instead to rampant issuance of dizzying amounts of dollars The key fact here is that other Western powers are using the same failed strategy of borrowing and printing as opposed to spending real receipts, and worse, they are devout Keynesians who believe as a matter of faith that you can stimulate your sick economy well. It’s for all the world like a drug addict who believes that stimulants provide energy, not realizing that energy can only come from foods, and that stimulants only induce the body to utilize this energy. (By way of reference, there is not one calorie in caffeine).

In a nutshell, the EU top deceivers and their accomplices in national governments are not about to disengage with the US, no matter how much Washington and its deceptocrats abuse them.

But below this rarefied stratus of bureaucracy is a seething mass of real people who are increasingly dissatisfied with the status quo. The increasingly roiling discontent is obvious in the Greek Syriza, the Freedom Party in Holland, the UK Party UKIP, Marine LePen’s Front National, and in lesser parties scattered around Europe, and the issues are much more complex than simple economics – including as they do the impression of an increasingly unwelcome Islamization or the potential addition of another Greece-like basket case to the collection of misfits. The most popular parties in the rich North are now anti-EU, and that is scarier for the Brussels bureaucrats than the anti-austerity sentiment in the South, although taken together, they could easily be fatal.

No matter where you look the EU is under heavy fire and seems headed for collapse.

So here is my point: If analysts can make the US economy look good only by comparing it to the above described certified European losers, what does that tell you about the dollar?

We would do well to call off the dogs of cold economic warfare before Russia and its BRICS allies decide to walk away from us once and for all and Europe decides to follow them, leaving the US high and dry.

“Encirclement” will have come full circle.