I See Inflation At Crutchfield

[a4eaudio]

I keep looking for the USA consumer price index % expected rise but maybe it has not filtered through supply chain from tariffs quite yet?

Effect may show in next couple of months.

It is starting to show up in your dark red line,. which reached a 6-month high in July. The overall inflation was kept low with some falling prices in Food and Energy (most likely energy). While Energy prices going down will keep measured inflation down, it is quite bad if it is due to falling global demand for energy as we enter a recession (which is not being predicted right now).

The other indicator of inflation-to-come is in the 3-year high in the increase of the Producer's Price Index data that came out Thursday. This is an increase in wholesale prices and will make its way into retail prices unless retailers "eat" the increase. (I feel confident in my prediction that retailers will not be eating the price increases.)

https://finance.yahoo.com/news/ppi-inflation-shock-core-producer-prices-hit-3-year-high-in-july-in-head-scratching-inflation-surge-123743902.html

 

[a4eaudio]

I believe the plan gaslighting behind the tariffs is to use tariff revenue to fund our debt.

Unfortunately there is math.
Monthly tariff revenue "skyrocketed" from $8bn to $30bn in July. Assuming the tariffs continue into perpetuity, that is $360bn of revenue a year. Which is 1% of the debt per year.

I used Excel rather than my calculator app to make sure I entered all of the zeros correctly for the 100s of billions and trillions. To put this in perspective...If you have a $500,000 mortgage, this is like making an extra $5,000.

 

[DVDdoug]

Yep....it's a regressive tax , the poorer the consumer the worse it hurts..

Any expense hurts poor people more... But poor people aren't required to buy imported stuff and Chinese (or other higher tariff) imports can almost always be avoided.

Of course, I don't like paying ANY taxes but very few of my expenses are affected by tariffs. Most of my expenses are rent, fuel & utilities, insurance, and food (some imported). My Honda was made in the U.S. (probably with some imported parts that would now be hit with a tariff). My Dodge van was made in Canada but I don't have to buy another imported car. I don't buy electronics every month and I rarely buy anything that costs as much as my monthly rent.

It seems to be by design.

Not related to tariffs but I read in an economics history book that the main reason the U.S. went off the gold standard in the 1930s was so they could expand (inflate) the money supply. We were still "officially" on the gold standard until the 1970s but it was illegal for individuals to own gold (except for jewelry, etc.) and the official price (or value of the dollar) of $35 an ounce was meaningless.

A lot of economists are against the gold standard but IMO the good outweighs the bad.

I believe the plan behind the tariffs is to use tariff revenue to fund our debt.

The U.S. government was funded by tariffs for more than 100 years... But they didn't spend as much.

 

[JeffS7444]

I was surprised to discover that some newly introduced digital cameras are priced similarly worldwide. Which suggests to me that one strategy is to have everyone bear part of the burden. In the case of Leica Camera, USA and Canada have been treated as one for some time.

 

[Oddball]

Inflation is a calculated number. Based on spending patterns individuals could face greater peril. It has been pretty bad as of late. Good to see that at least EU is getting a handle on it.

Tariffs are a different matter and to be seen hot they play out. There is primarily effect on US consumers but also could be a ripple effect for the rest of the world - and then back to US.

I personally will not buy any US goods until US tariffs against EU go to zero. My choice but obviously steered by introduction of unfair one- way tariffs. Know a lots of Europeans that feel the same.

Effect of tariffs on US exports could be really bad despite the strange and obviously non binding deals that EU and Japan agreed upon.

 

[Gitfiddle]

Unfortunately there is math.
Monthly tariff revenue "skyrocketed" from $8bn to $30bn in July. Assuming the tariffs continue into perpetuity, that is $360bn of revenue a year. Which is 1% of the debt per year.

I like someone bringing math into this.

This is only one part of the equation though. How much is lost from decreased tax revenue from recent tax cuts? Compare that to increased revenue from tariffs. Recent bills also totaled a loss of 3.4T estimated from now till 2034 according to the CBO.

If reducing the debt was the plan, it wasn't everyone's plan.

 

[JPA]

The USA has the third highest debt to GDP ratio in the world, only behind Japan and Italy. It has THE highest total amount of debt owed in the world by a huge margin, $36 trillion. Yet we’re the only industrialized country that doesn’t have universal healthcare. But we spend more money on our military than the next 9 nations combined.

“ with a 2024 defense budget of $997 billion, which is more than the next nine countries' spending put together.”

I believe the plan behind the tariffs is to use tariff revenue to fund our debt.

Plan? You really think our government has a plan?

 

[Timcognito]

If reducing the debt was the plan, it wasn't everyone's plan.

It was not the plan. The plan was find a way to pay off some the debt without taxing the rich that both have the money to pay more for goods and because 10% pay 72% of income taxes, only a buy little more than 10% of goods. So its shift to lower income people that buy the 87+% of the goods, mostly essential goods. Less tax income is available for debt except sales tax as prices go up. That was the plan not to let the people with money pay for the debt they incurred having lower taxes.

 

[Gitfiddle]

It was not the plan.

Yes, I agree, but I'm trying to more gently show context. Also the whole no politics thing is tricky, so I think I'll stop replying out of curtesy to the staff. It's already past the point of being derailed by my own reckoning.

 

[valerianf]

I believe the plan behind the tariffs is to use tariff revenue to fund our debt.

Alas Jim, the plan behind the tarifs is for the government to get more fresh cash to be able to increase even more the US debt.
We will be poorer for sure.

 

[tmtomh]

The tax cuts are disproportionately beneficial to the wealthiest.

The tax cuts increase the deficit and the national debt.

Increased tariff income does not begin to approach balancing out the deficit and debt-increasing effects of the tax cuts.

Increased tariff income must be subjected to the Laffer Curve like everything else: the desired increase in tariff income will not be achieved because the increased tariffs have a negative impact on consumption levels of the goods subject to tariff. One can certainly argue that for many items, US consumers are close to a captive audience since there are many sectors where there simply are no affordable options that are not subject to tariffs. But even with that, if consumers of modest means are forced to bear the cost of such tariffs because they essentially have no other choice, that means their consumption will be reduced in other areas. Since 70% of the US economy is consumer purchasing, that will have an effect no matter what. We are seeing some of that effect already in the form of slowing job growth.

Huge cuts to SNAP (food assistance) and Medicaid are the main measures that have been adopted to try to counterbalance the fiscal effects of the tax cuts.

I'm sure some or many folks will consider some or all of the above statements "political." But to the best of my knowledge they're all factual, and one can draw varying political conclusions from them based on one's political outlook. So in my view they are not actually "political" statements in the sense of being partisan or intentionally slanted to try to support this or that party or group.

 

[tw 2022]

I believe the plan behind the tariffs is to use tariff revenue to fund our debt.

good luck with that.. I hope that works out , but my bet is on more corporate subsidies... *now* i'm gonna shut up and watch from the sidelines.. btw : i agreed with your entire assessment up to the above statement ,, so maybe "both sides" really are looking for a common solution? .. gosh , I hope we can get to that point soon...

 

[tw 2022]

Huge cuts to SNAP (food assistance) and Medicaid are the main measures that have been adopted to try to counterbalance the fiscal effects of the tax cuts.

this is gonna create a 3rd world type poverty issue , imo....

 

[amirm]

I believe the plan behind the tariffs is to use tariff revenue to fund our debt

There is no plan. There never was a plan. It is a layman idea of what gets you elected. "Bring back jobs."

That aside, if everything stays constant, then sure, us paying more taxes can pay down the deficit. If on the other hand, the economy slows down, then revenue collection itself suffers and with it reduce general taxes collected by the government. Ditto if it reduces imports.

 

[tw 2022]

Can you expand on this point, what is the model being referenced?

absolutely , companies like revel and JBL can stockpile parts and inventory based on samsung's deep pockets(if Samsung agrees).. thus they have the possibility of undercutting smaller companies sales prices and running the ascend audio/ philharmonic audio types out of the game who obviously *can't * stockpile (philharmonic is literally 2 guys in a garage and a contract with a Chinese company that builds the boxes ).. they obviously don't have anywhere near samsung's ability to withstand tariffs...the model being : the current state of the economy and what tariffs are doing presently, not to mention this is a replay of the late 19th century economy ( reference the gilded age) that ended with the 1929 stock market crash that was fixed ever so slowly by FDR and his safety net programs, govt job creation and the industrial bonanza of ww2 and the GI bill that followed the war

 

[tw 2022]

There is no plan. There never was a plan. It is a layman idea of what gets you elected. "Bring back jobs."

That aside, if everything stays constant, then sure, us paying more taxes can pay down the deficit. If on the other hand, the economy slows down, then revenue collection itself suffers and with it reduce general taxes collected by the government. Ditto if it reduces imports.

you hit it on the money.... it ends up being one step further down the road to corporate "ownership" of our govt.... the game rigs itself with plausible deniability as a backdrop to the effect.. I have no doubt though that there are some folks very high up in govt that believe this model is "for the best".. we shall see how that works out as the tax base shrinks

 

[Jim Creek]

There is no plan. There never was a plan. It is a layman idea of what gets you elected. "Bring back jobs."

The “Tariffs will bring back jobs” mantra is what fooled blue collar workers with poor skill sets. Hanes makes underwear in Vietnam because the wages are $1.35/hr. Hanes can’t make underpants in the USA when the wages are $35/hour.

I really don’t know what their plan is. I was just guessing based on what seems logical, that is use the tariff money towards deficits.

 

[tw 2022]

The “Tariffs will bring back jobs” mantra is what fooled blue collar workers with poor skill sets. Hanes makes underwear in Vietnam because the wages are $1.35/hr. Hanes can’t make underpants in the USA when the wages are $35/hour.

I really don’t know what their plan is. I was just guessing based on what seems logical, that is use the tariff money towards deficits.

exactly , people can't afford "American made goods" when they can't pay rent or buy food any more than they can afford tariffs....I can't see how it won't slow the economy to the point of stagflation , but we shall see...

 

[Timcognito]

I really don’t know what their plan is. I was just guessing based on what seems logical, that is use the tariff money towards deficits.

It's tax shifting scheme no direct taxes on those who pay most of taxes to those that don't through a regressive indirect payment, passed on tariffs. Not saying it will work, I'm GUESSING recession.

 

[tw 2022]

It's tax shifting scheme no direct taxes on those who pay most of taxes to those that don't through a regressive indirect payment, passed on tariffs. Not saying it will work, I'm GUESSING recession.

another good observation... it simply shifts the tax burden to those that can least afford it, creating more of a wealth inequity , where those that have capital already can buy up even a greater % of the economy and it's assets...and pay politicians (of both parties , unfortunately) to keep the ball rolling...it's gonna take a major financial crisis to slow it down, but I think it's(a crisis) inevitable.. and we can obviously trace much , if not all of this back to(blanket) tariffs...