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Latest Research Shows the Dollars Purchasing Power Eroding

Dollar Vortex

Did you see last Friday’s Employment Situation report? It’s a mixed bag, and there are lots of stats for media pundits to pick and choose from.

The biggest highlight was that the unemployment rate is down to 3.7%. This is the lowest in 49 years; an optimistic outlook.

But there are a few other items that tempered the optimism. For starters, Non-farm payrolls came in much lower than expected.

And the bad news that had been somewhat downplayed was that the actual rate of employment which stood at 60.4% is also near a 50-year low.

That’s what the latest employment report tells us. And overall, it’s not good news, for reasons that are way too obvious.

Takeaway: unemployment is low, but so is the rate of employment, and wage growth is hardly growing at all.

Is the Consumer Price Index a Reliable Measure for Inflation?

The problem with the CPI as an inflation measure is that over the decades, the government has been changing the calculation.

  • If today’s CPI were to use the same calculation it had followed in 1990, our inflation would be over 6%.
  • If CPI were to use the 1980 calculation, our inflation would be well over 10%.

So how reliable is CPI, really?

Oil prices bottomed in 2016, and it’s no coincidence that gold prices also bottomed around this time. As we all know, today, energy prices are on the rise.

Pretty soon natural gas prices may follow oil. What this means is that anything that is transported, farmed, mined, or manufactured–anything that relies on energy–is going to get even more expensive.

Takeaway: our dollar’s purchasing power, already weakening as evidenced by the rise in the costs of goods and services, is about to get even weaker as higher energy costs filter into the general economy.

Supreme Court Just Made Consumer Costs Even Higher With Wayfair Decision

The 2018 Wayfair decision allows states to apply sales taxes to online goods shipped into their respective state. Once this goes into effect and is applied universally, the cost of online goods and services will increase.

Takeaway: you will end up paying more in taxes, this time for online or out-of-state goods, further weakening your purchasing power yet again.

Amazon Lobbies to Have Every Company to Offer a $15 Minimum Wage Policy

Amazon caved-in to the progressive left, agreeing to impose a $15 minimum wage policy. Now, Amazon wants to prevent its rivals from gaining a cost advantage over its position.

Amazon declares its intention of lobbying the government to impose the same minimum wage policy on all employees. Chances are that this won’t happen with President Trump in office.

Takeaway: If Amazon were to succeed eventually, expect a massive increase in consumer prices in addition to layoffs from businesses that will break under the mandate’s strain.

Tariffs Are Beginning to Negatively Impact US Consumers

Sure, the cost of tariffs is hurting certain foreign exporters, such as those in China. But another consequence is that the costs of goods in the US are much higher.

Remember, many American businesses chose to benefit from certain imports, whether they considered the terms of the deal fair or unfair. Why? The reason for this is that the imports were still relatively cheap as compared with other alternatives.

Takeaway: Now that tariffs have made these imported goods more expensive, the extra costs incurred will simply be passed over to the consumer–meaning that YOU pay the extra tariff costs.

What all of this data tells us is that the purchasing power of the US Dollar is sinking…and it will continue to sink.

Unfortunately, the CPI reports, which are not accurate, to begin with, have given investors a false sense that inflation is under control.

This is why many investors have shied away from gold and silver, the only assets that can preserve purchasing power.

The truth is that Inflation is NOT under control. And a massive price spike in goods and services is already underway.

Might now is the time to hedge your wealth?

UPDATE: A day after this article was written, US and worldwide markets have begun their plunge. Gold, on the other hand, has begun to rise.

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