Jerome Powells’s comments emerged yesterday that acknowledged what we all know: inflation is sticky and frankly is being lied about by the government stats department. This from a tweet yesterday which was excellent context to how things like “seasonal adjustment” to gasoline prices made high prices “low” in the inflation calculation and what’s going on with healthcare.
For those that argue that the government has been intentionally manipulating inflation numbers to mislead the public about the actual real inflation rate, well, here is some legit ammo for you.
According to the US Government, the cost of health insurance in the US has declined 15% over the last year and is 3% lower than it was 5 years ago. Everyone knows this is absolutely false. So how does the government get to this made up number?
The government is not using actual premium data to determine the cost of health insurance, but instead using changes in the retained earnings of health insurers. So when their retained earnings decline as they have over the past few years, the government says that the cost of health insurance has declined as well.
The result? A result that implies health care costs have DECLINED, when in reality, they have SOARED and become an increasingly unbearable cost to most Americans.
Peter Mallouk
Not surprisingly, the Fed is really stuck between a rock and a hard place with admitting inflation is stickier but still actually talking about rate cuts this year. If anything, they should be raising rates? But, that makes the US Federal debt even more expensive to service, with more than $1 trillion being spent currently, which is ~20% of federal revenues. If they lower rates as the President wants (independence, anyone??), treasury auctions for t hills will be even worse than they were over the last month. The 10 year is at 4.7%. The yen carry trade is in trouble. And if it hits 5%…. Look out. But I digress.
Bottom line, we are starting to see the cracks in the financial tomfoolery and the market is reacting. Do we get to 4300 on the S&P? Probably not without a dramatic collapse of something but honestly - it would be a nice reset and, speaking my book, it’s what I’ve been waiting for.
Two quick updates personally. Today marks 30 days of sobriety and I head to Vancouver to see my sister tonight and participate in a Canada Vs US test match weekend. Saturday there is a black tie event and the only Tux I own comes from my wedding 22 years ago. Fortunately, my waistline is 4 inches smaller, I’m down 17 lbs and amazingly, I actually fit in the suit! Go figure. It’s been an interesting 30 days. I’m looking forward to the next 30. If you have been struggling with your health and motivation, pausing drinking for 30 days is a pretty neat trick.
And finally, we found out yesterday Andrew didn’t make the team for next year. As a parent, it’s almost more heartbreaking than for the kid but what’s been amazing has been his maturity. “I’m not going to cry about it, Dad. I just want to prove them wrong.”
So the search for a new team and high school begins but with every door that closes, another one opens and I couldn’t be more proud of him.
I've been waiting for you to cleverly work in how the unforeseen consequence of inflation may be a decrease in obesity, long a health care topic you rightfully continue to expose. Good, too, that your boys see you make the sacrifices needed to chase the squash cup man.
Great response from Andrew! Nothing like a chip on your shoulder for motivation…I guess the Feds aren’t smart enough to understand 1) with people retiring and getting on Medicare they don’t need health insurance and that is one reason revenue is lower, the other is most likely due to the increase in premiums there are a lot of people who can’t afford health insurance coverage. Here’s the real situation for a family of 3, you can get High deductible insurance for 800-900/ month, that covers nothing until you achieve a $10k deductible so if you have surgery or extensive medical treatment it helps out and is likely to cover 70/30 or 80/20 after deductible. OR if you can afford it, there’s the $1374 a month plan that lowers the deductible and gives you SOME benefits like copays for GP appointments and 1 yearly physical but you will end up paying for the majority until you hit your deductible of 3500-5000. That’s what real life choices are for most people these days unless you’re lucky enough to have company insurance and you still have to pay for it but at much lower cost