Killer Inflation

You can’t hide your lyin’ eyes

And your smile is a thin disguise

I thought by now you’d realize

There ain’t no way to hide your lyin’ eyes 

                    Eagles 1975 

I knew they were lying but I couldn't prove it.  I just knew it.  For years now, especially the last few, the government has been telling us that inflation is low and totally in control.  Typically their numbers are coming in at 1 to 2%. 

My eyes were telling me the opposite.  With the possible exception of tech, I could not think of one product or service that I used that was only going up 2%.  I asked friends and family, and no one else could either.  My credit card bill was skyrocketing.  My health insurance premiums were going up 20% a year with no health problems, when the government was telling me that they were barely going up at all.  The price of gas doubled since Obama took over and every product uses fuel, whether in manufacturing, transportation, etc.  Yet I was supposed to believe that miraculously prices were barely moving when gas was rising rapidly.

          So I knew it was a lie, but I didn't have any real proof.  Typically when I write about finance I like to have evidence to back me up.  One friend, a strong Obama supporter, told me that I was a conspiracy theorist for saying that the consumer price index numbers were bogus.

          And then the brilliant Peter Schiff decided to actually do the research.  If you don't want to take the time to watch the full video here, the short version is that inflation is going up about 7 to 10% a year, minimum.  This was not rocket science; he simply went back in time and measured the price of items then compared to now.  Some of the numbers are shocking, not because prices have gone up so much, but because they have gone up so much when the government was telling us the opposite.

          A few takeaways from the numbers: First, this puts tremendous financial pressure on most people.  If you're not getting substantial raises every year, you’re falling behind.  If you're fortunate enough to have some money to invest, you better make sure you’re making at least 10% a year on them, or you're losing money.  Conservative investing no longer does the trick; you have to go for homers and not singles. 

          Most troubling is that people on a fixed income, like the elderly, are just getting destroyed.  Their cost-of-living increases are based on the phony government inflation numbers, so they’re barely getting any more money at the same time that prices are going through the roof.

          As Schiff noted in the video, more people are noticing and becoming concerned.  I think, though, that the reason that you're not seeing rioting in the streets (coming soon to a theater near you) is that inflation is an insidious, hard-to-see tax.  You go out to dinner and your meal is $9 instead of $8, and you barely notice.  Your $2 Starbucks is now $2.30, but you don't care because 30 cents isn’t going to break you.  We don't stop to think that all these little price increases are actually big price increases of over 10%.  At the end of the year that means you have 10% less money, and at the end of 5 years it's gotten really ugly.

          I feel like I need to say something happy to end this somewhat depressing blog.....hold on.....thinking.....at least the Starbucks keeps me awake so I can write my blogs.....that's not good enough.....forget it, there's nothing good to say about inflation.

Have a good night everyone.

 JR    

 

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Rise of the Phoenix

Got no place to go
But there's a girl waiting for me down in Mexico
She's got a bottle of tequila, a bottle of gin
And if I bring a little music I can fit right in

Oh, well happy New Year's baby
We could probably fix it if we clean it up all day
Or we could simply pack our bags
And catch a plane to Barcelona 'cause this city's a drag

            Counting Crows 2004

Phoenix is on my mind tonight.  I recently got back from a family vacation from there and the Grand Canyon.  First, the good:

-The people are extremely friendly, more so than in Atlanta.  Even the folks behind the cash registers are nice;

-The city is bizarrely clean.  I couldn't figure it out.  I just didn't see any trash, anywhere.  It's as if they instituted the death penalty for littering.  And now the bad:

-It is by far the ugliest major city I have ever seen.  The town is colorless.  It's a desert, so everything looks like it's about to shrivel up and die.  You see a lot of cactus, and very little grass.  In place of where the grass would normally be, like in medians, it's all gravel.  For some reason it reminded me of an ashtray;

-Within 10 minutes of being there I asked my wife for moisturizer.  I had always laughed at people who talked about “dry heat".  I just assumed they were like local newscasters, bantering about without really anything to say.  I was wrong.  Although the temperature was great for December (mainly in the 60’s), you just immediately dry out.  It's hard to describe; you don't sweat.  I couldn’t live there year-round.  And the miscellaneous:

-The demographics were unlike any city I've ever seen.  Atlanta is black and white, with sizable and growing Hispanic and Asian minorities.  Phoenix is Hispanic and white; I didn't see more than 10 African-Americans the whole time I was there.  After spending about a week there, and walking through the Super Target with large, bilingual Spanish and English signs, I realized something about the immigration debate (which apparently will be a major topic for Obama’s second term); it's irrelevant.

          I always think that immigration reform is really code word for “we don't want any more Hispanics in the US”.  Look, I'm for a very strong, tight, US border, but deep down I think that's how most people view the immigration debate.  I just can't see people getting so worked up if, for example, it was 12 million Jews or Asians who were illegal ("They're stealing all the accounting jobs! THIS MUST STOP!”). 

          In any event, when you're in Phoenix you realize that, well, it's too late folks.  Whether you’re happy about it or not, the amount of Hispanics in America will continue to grow.  They are the biggest minority group in the country already, with the highest birthrate.  It may make some people feel good to talk tough about deporting the illegal ones.  But it's irrelevant.  The horse has left the barn.

          -Did you know that the Grand Canyon is freezing in the winter? I didn't.  Don't make the same mistake I did.  It lives up to the hype, but it's challenging finding the right time to go.  I've been told it clears 100° in the summer. 

          -Uno is a fantastic game.  It's really a complex adult card game masquerading as a kid’s game.  Although it doesn't have the level of complexity and strategy as no limit poker, which I know a little bit about, it requires many of the same skills to be good.  My wife and I played a bunch on vacation, and still occasionally play (I'm guessing my single friends are cringing when they hear I took a vacation and played kids’ card games.  You know what I did on New Year's Eve?  The same thing I do almost every night of the year.  Enjoy your singlehood while it lasts).

Have a good night everyone.

JR

 

Poisonous Fruit

Well now way back in the Bible

Temptations always come along

There's always somebody tempting

Somebody into doing something they know is wrong

They say Eve tempted Adam with an apple

But man I ain't going for that 

                    Bruce Springsteen 1984

 

Fruit is Sugar Corn Pops.  When I was a kid watching the Saturday morning cartoons, it seemed like every commercial for the sweet cereals would say they were “fortified with 10 essential vitamins".  I was only about 6 or 7, but even I knew that was a crock.  I knew that stuff was bad for you; that's why my mom told me to eat my vegetables and not to "eat your Sugar Corn Pops and Peanut Butter Captain Crunch”.

 

         The difference is fruit is horrible for you, but no one seems to have figured this out.  All the focus has been on the good things that fruit has in it, like antioxidants and vitamins.  While this is true, that is far outweighed by the fact that fruit is sky high in sugars and carbohydrates.  Basically, you’re going to get fat loading up on fruit, and then you’ll have far greater problems than whether you get enough antioxidants in your system.

         The numbers aren't pretty.  A banana will cost you about 30 carbs, a pear 25, an apple 20.  The carbs are almost all sugar.  If juice is your thing, it raises your blood sugar even faster than the same solid food does (please don't ask me the science on why).  I can't think of a faster way to get sugar in your blood stream, unless you want to go Breaking Bad and inject it.

         Somehow fruit and vegetables have gotten lumped in together in the national consciousness, as if both are equally healthy.  If I could point to one major factor as to why we have an obesity and diabetes epidemic in this country, it would be this.  People are starting out their mornings downing almost 100 carbs, feeling physically great for about 30 minutes because they're on a sugar high, and feeling psychologically great because they think they just ate a healthy breakfast.  Let's keep this simple: vegetables are great for you and most of them are low-carb, while fruit is the opposite. 

         Someone told me that the Weight Watchers meal plan calls for an unlimited amount of fruit.  If this is true, you're going to have a lot of fat dieters.  Let's keep this simple part two: all sugars spike your blood sugar and are bad for you, whether fruit sugar, cane sugar, etc.  Until people start understanding the difference between fruit and vegetables, our health problems in this country will continue to get worse.

         Have a good night everyone.

         JR

The Only Diet That Works

In touch with the ground
I'm on the hunt I'm after you
Smell like I sound I'm lost in a crowd.
And I'm hungry like the wolf.
Straddle the line in discord and rhyme
I'm on the hunt I'm after you.
Mouth is alive with juices like wine
And I'm hungry like the wolf

           Duran Duran 1982

I can't seem to get away from thoughts of food. I grew up in a household where my parents ate healthy and exercised consistently. When I got older I dialed that up a few obsessive levels, working out like a fiend and maybe eating a little too clean. And then I married a professional dietitian. What can you do?

Between the lifestyle and reading a ton on the subject the last 30 years, I've come to a few conclusions. The most important one is that for weight loss, nothing works except low carbs. The good news is that makes it simple, because you can ignore all the other indicators, like fat, calories, etc. The bad news is it’s not an easy diet; I like eating dead animal as much as the next guy, but what I really want is pizza, ice cream, and as much kid’s birthday cake as I can get my hands on.

          The science is pretty simple. When you eat carbohydrates your blood sugar spikes, and insulin is produced to lower the sugar levels. The insulin converts into fat in your body. The evidence is overwhelming that as our carbohydrate/sugar level has increased, obesity has skyrocketed.  Diabetes was virtually nonexistent 100 years ago, prior to the prevalence of processed carb-loaded foods and the increase in sugar consumption.  Even mainstream dieticians, with whom I have very little nice things to say about, are starting to push a slightly less carb dominated diet.

          When the Atkins craze caught fire in the 90s, I thought this was the one diet that would stick because, well, it works. It didn't and I think there are three main reasons for this. 1^st, as I said before, carbs, especially the sweet ones, just taste better than protein. 2^nd, the diet is totally counterintuitive to most people. It logically make sense that if you lower your intake of fat you will be less fat, and if you eat foods high in fat you will get fat, right? Except for the fact that it's not true.

Lastly, people misunderstood the diet. They just assumed that it required a permanent state of not eating any carbs, when it really called for a very short period of no carbs and a permanent state of reduced carbs. Not eating any carbohydratess for long stretches is impossible. If you want to see something funny, watch a bodybuilder right before a contest, after they've done three days of what they call “carb depleting”. They're basically incoherent. Please don't ask me how I know this.

          Why does reducing the consumption of carbs drop the pounds? Who knows? The most logical answer that I've heard is that early humans were hunter/gatherers, spending their time eating protein-rich animals and fish that they killed. Evolution took care of the rest, and over time this diet became the most efficient one. Whatever the reason, it works.

          Have a good night everyone. I'm gonna go grab a steak.

           JR

 

 

 

 

The College Tuition Disease

I been doing my homework now for a long time
And everything that I look for I know I will one day find
I'm a fool so I'm told I get left in the cold
Cause I will search the world for that fool’s gold 

                    Graham Parker 1976

$42,000 a year! That's what a friend recently told me it cost to go to Indiana University, my alma mater.  I had a great time there, and it's a pretty good school, but if you think your kid will be able to pay back $168,000 before they turn 35 with an IU degree, you're dealing thin.  The same could be said of just about any school in the country.

Skyrocketing college tuition has become a hot topic, with Time magazine recently devoting their front cover to it.  Many private schools have blown past $20,000 and $30,000, and are now in the 40s and 50s.  The average debt a student has after school is above $25,000, and for plenty of them it’s over six figures. The strange thing is that most articles that discuss the price don't even talk about the reason that it's going up, just the hardship.  It's as if somebody had a killer disease and all the doctors were only concerned with treating the symptoms, without figuring out what caused the problem in the first place.

Hopefully the following example will explain why prices are rising and how to quickly cure the disease:

Let's say you start a business that makes widgets.  You decide to charge $10 for each one. Unfortunately, you find out that the huge majority of your customers can't afford this price.  You quickly realize that you're going out of business unless you lower the price.  Just as you're about to do so, a man named Fast Freddie comes to town. 

Freddie's a great guy; all he wants to do is help people.  He starts loaning all your customers money so that they can afford the $10 widget.  You're thrilled, as now you don’t have to lower prices.  As time goes on you decide to test how nice a guy Freddie really is. You raise your prices to $15.  Obviously no one can afford it.  But Freddie steps in and lends even more money to your customers, so they can cover the $15.  You, being the sharp businessman that you are, keep raising prices because you, like everyone else, like money.  Before you know it, the widget that should be about $5 costs $50.  There's no end in sight.  As long as Fast Freddie keeps lending your customers virtually unlimited amounts of money, you're going to keep raising prices.

          You get this, right? Over 90% of college loans are now paid for by Fast Freddie, oh I mean the government. This has completely and totally distorted the free market, to the point that we have runaway inflation in college tuition. 

          The solution is simple. Get the government out of the moneylending business for college, and watch costs plummet.  But this is not going to happen. Why? Politics, like virtually everything else it seems nowadays.  No politician can get up and tell the truth.  He would immediately be criticized as a coldhearted, out of touch snob who is especially biased against the poor and middle class, who can least afford the sky high cost of college tuition. The sad thing? The current system hurts the poor more than anyone.  The rich guy or gal can either pay for tuition or have to borrow very little, so their kid doesn’t graduate with an oppressive debt load.  It's the poor and middle class that are now getting out of school as indentured servants.

          Go ask your father or grandfather what college cost before the government got involved. 

          Have a good night everyone.

 JR

Moral Dilemma

            This indecisions bugging me

If you don’t want me, set me free

Exactly whom I’m supposed to be

Don’t you know which clothes even fit me?

         The Clash 1981

 

Heading into the upcoming presidential election, I have a moral dilemma. This is one that I'm guessing a lot of people have before elections. Do you vote for the candidate that is better for you personally, or better for the country? In a perfect world the two are the same, but we don't live in a perfect world.

This time, it's about money. With Obama as president, it is ridiculously easy to make money on your investments. (I won't bore you with the details, but regular readers know what I'm talking about). This does not mean that you can’t make money with Romney in office, it's just that you have to do a little more homework. Actually a lot more. The problem is, overall Obama's economic policies are disastrous for the country. We're tipping back into recession (I actually think we're already there); if you think the last 4 years were bad, my friend, you ain't seen nothing yet.

So what would you do if you were in this type of situation? I first think what I would do if my profession were at stake. I make money representing injured workers. Let's say God woke me up one night and said that within 24 hours, if I voted yes, there would be no more workplace accidents in America. The catch is, of course, that within 24 hours I would be out of business. To me, this is an easy one. I've seen firsthand the devastation that physical pain can have on people and their families. I would vote to end the accidents in a heartbeat; I don't think I or anyone I know could live with themselves if they chose the opposite. Similarly, I would assume that all oncologists would quickly vote to immediately end all cancer if they could.

But yet, my gut tells me that when it comes to voting for the country’s financial well-being versus mine, I would choose mine. I'm not exactly sure why; I struggle to find the difference between this and the workplace example. Maybe I can hide behind the fact that I'm just one vote that realistically won't make any difference. Maybe if I had the only vote it would be different. Or maybe it's the fact that while I love America, I love me and my family more.

Whatever it is, I started thinking about it, and at least for me it's a tough decision. I would guess that this type of choice has to regularly be made by a lot of people in the workplace. Although in this particular example it won't make a bit of difference as to who is ultimately elected, I think it goes to the core of a person’s heart; are you someone whose interests lie primarily with yourself and those close to you, or with the greater good?

Have a good night everyone.

JR

 

Real Olympic Sports

              Take off your uniform
              They see what they want to see
          You should have never been born
          You’d better stay with me

          John Hiatt 1979

I am proud to say that I took my Olympic watching this year to an entirely new level of obsessiveness. First midnight, then 1:00 A.M., and by the end I was going to bed at about the same time my wife wakes up in the morning. Watching the Olympics on TV should itself be an Olympic sport. Which brings me to my topic tonight: if I was King, which sports would be eliminated from the Olympics. 

I've come up with a quick, easy system to determine this: 

1)       Any sport where the winner is determined 100% of the time by a referee's opinion has got to be cut. If there is no objective way to determine who won or lost (like points scored, fastest time, weight lifted, height vaulted, etc.), it has to go. So say goodbye to diving (sort of interesting, actually), synchronized swimming (still hilarious, even after all these years), and gymnastics (the older I get the more I can't stand this sport. I realize I'm a minority here).  

We’ll still keep the sports that can go to a judge's decision, but don't have to, like boxing. You can always knock the guy unconscious and not leave it up to a judge. There's always that.  

2)       You can’t have any sport in the Olympics that is a young kids’ game. Did you know that trampoline is an Olympic sport? No, seriously. There's a reason that the Olympics got rid of tug-of-war, which in the early 1900s was an Olympic sport (I'm not kidding, look it up).  

3)       We’re only going to keep sports in which the athletes have to excel in at least one of the following traits: Speed, jumping, or strength. The latter allows us to keep weightlifting, even if most of the athletes appear to be clinically obese. The corollary to this is we will only keep sports in which you actually sweat. Say goodbye to equestrian (beautiful, but give me a break), archery (actually cool looking, did you get a chance to see what a modern day bow looks like?), and air rifle. 

As an aside, you know a quick way to make the last two sports the top-rated in the Olympics? Combine the two, let loose a totally random animal for each competitor, and call the sport “hunting". Come on, you know you would watch this.  

(Please, no hate mail, I'm just kidding. Did I mention that I go to the zoo with my kids every month?)  

So there are the rules. This does not mean that the sports eliminated are not fun, cool, or interesting. My favorite show of all time was “O” by Cirque de Soleil in Las Vegas. I think this type of venue is more appropriate for the sports that did not make the cut. Similarly, I would love to go watch the best archer in the world and predict whether she's a better shot than the girl from Hunger Games. Just don't call it an Olympic sport.  

But since I'm not king, I guess we'll just get more of this. 

Have a good night everyone.  

JR