Still, No Talk About Cost-Push


by Karl Denninger, Market Ticker:

In virtually every circumstance the the issues that face people who are working in some fashion can be reduced to “cost push”.

This used to be widely understood by economists.  It no longer is.

The reason is political, not factual.  It’s not a mistake, it’s an intentional act.

In other words they’re lying.

Witness this article on CNN, complaining that tax refunds are down 8% on average this year.  Last night while out with a friend after debugging a computer problem most of the day I saw a “news” report on the TeeVee in the establishment saying the same thing and blaming the Trump/GOP tax bill for it.

Unmentioned, of course, is that the rates of tax due dropped and so did withholding tables.  In other words over the last 12 months people have had more money in their paycheck.  Not a huge amount per month, of course — maybe $50 or so — but over a year that’s $600.

Well, now tax time comes and there’s $170 less in your refund.

Hmmm… you got $600 through the year jackass!  What did you do with it?  You’re net $430 to the good and this is a “crisis”?

There was not one mention of the bracket and rate changes that led to you having more money all year long, nor that those who are whining now blew the cash during the year.  In other words the TeeVee “reporter” was claiming there was a reason for a cryfest over someone intentionally shooting off their own big toe.

Sorry, but no.

Then there’s this one, also from the Communist News Network:

Denver is so expensive that teachers have to get creative to make ends meet

(CNN) For 14 months, teachers in Denver have been negotiating with Denver Public Schools for more pay. On Saturday, the Denver Classroom Teachers Association said talks had broken off and they’ll walk on Monday.

Yes, it’s about money, many have told CNN. But it’s also about the uncertainty of living paycheck to paycheck. It’s about the necessity of taking on a second or third job. It’s about the untenability of carrying on this way much longer.

At least the headline is right.

But not one single byte of digital ink was spent exploring why Denver is so expensive.

In other words why is it that a $50,000 salary isn’t more than enough for a family of four to live on; indeed, one of the profiled teachers has no housing expense at all as that single person lives with their parents!

Remember, we’ve been told that there is no inflation issue over the last 30+ years.  Well, if there’s no inflation (increase in the cost of living) then why is it that all these people have huge amounts of student debt and why is the cost of living so damn high?

One of the two has to be false.  Either all those “struggling” are lying or there has been massive inflation.

Inflation, I remind you, is always and everywhere a monetary phenomena — and as a result, since Congress is in charge of the Federal Reserve (they not only enabled it originally they control the law governing it) and the regulation of banks that emit credit and thus expand the money supply it is entirely within the responsibility and control of Congress that has, in fact, led to this circumstance.

In other words, as I pointed to my late father in the 1990s, you voted for this **** and as a result you already spent the ****ing money.

You can’t spend the same dollar twice.  The outright fraud peddled by people with their “MMT” nonsense is exactly identical to claiming you can.  Ditto for those who says “deficits don’t matter”, or that we should “use” deficit spending to “prop up” this or that.

The price of all of this is inflation and by definition inflation drives up the cost of living in nominal dollars.

You can’t fix this by “giving” people raises because that, in a government job, also results in more dollars being introduced into the economy, especially when any part of it comes from the Federal Government that simply prints it into existence through the Treasury market.

When it comes to schools it’s even worse since they’re typically funded to a large degree by property taxes.  There’s a municipality I’m extremely familiar with that has seen negative real estate prices on a nominal (not real!) basis for more than 20 years as a direct consequence of ridiculously-ratcheting property tax levies.  This is a place where some 15 square miles of island with a huge percentage of it either deeded open space or an airport where there are no houses “requires” more than 20 full-time cops yet it has nearly the lowest property and violent crime rate in the nation. Indeed on a scale of 1-100 (100 being safest) this township rates 95.  The rate of overall criminal activity in this township on an annual basis is three per square mile, one-sixth of the average for the state and and one-eighth of the national average.  Yet they need more than 20 full-time cops to “police.”

Their idiocy in school levy is similar.

Denver has the same basic problem as does damn near everywhere else.  There’s no accountability — that township spends a crazy amount per-capita on cops for which there is no demand as there is no crime for them to investigate and arrest perpetrators.  They simply “need” all those cops.  Likewise, Denver has a crazy cost of living because just like most areas because they “need” to spend all this money on schools yet there is no evidence that any of it actually improves educational outcomes.  We also “need” to spend nearly $4 trillion a year in this country on “health care” most — about 3/4 or more — is siphoned off through fraud, felony, extortion and price-fixing.

All of these things and more have driven the cost of living in real terms through the roof.

The problem isn’t that teachers only make $40,000 or $50,000 a year.  That’s pretty good money.

It’s that a family of four can’t live on that because all the pie-in-the-sky “free money” games have driven up inflation whether reported or not.

It shouldn’t be like that and absent fraud and felony it wouldn’t be.  Productivity is by definition deflationary; the definition of improving productivity is doing more with less!  Therefore if productivity expands at 2% a year (for example) then what you used to have to pay $100 for now costs $98!  So why is it not $98, but $105?  Because someone stole the other $7 from you, that’s why.

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