Summary: Powell says now's not the time to worry about spending<br> Biden's Plan - A giant all-in bet to "run it hot"<br> Cancel culture lion may just turn on its own master<br> <br> <br> <br> The McAlvany Weekly Commentary<br> with David McAlvany and Kevin Orrick<br> <br> Seat Belts & Inflation: A Second Too Late Is Still Too Late<br> February 16, 2021<br> <br> “The idea that culture wants to define what an appropriate conversation is, or who adds value to that conversation on the basis of intersectionality or some other absurd criteria, it pisses me off. But what colleges and universities caved to a long time ago, is going mainstream and I’m going to protest that. If you’re limiting your inputs, I think that ultimately has a devastating impact on your outputs.” —David McAlvany<br> <br> Kevin: Welcome to the McAlvany Weekly Commentary. I’m Kevin Orrick, along with David McAlvany. Last week we talked about skiing in powder, and it was beautiful, it was warm, compared to what you did this week. Which is the contrast to running something hot, you were running cold. How cold was it in Montana?<br> <br> David: They started at negative 17, and warmed up to negative nine. It gave me the sense of being in Germany with negative interest rates. Like you think, where do you go from here? Cold, colder, coldest.<br> <br> Kevin: We’re sitting in the studio and you used to have a nose.<br> <br> David: I know.<br> <br> Kevin: Now it’s black and part of it has fallen off. But given temperature changes and some of the things that are going on, I looked at what’s going on in Texas right now, Dave. And this morning we were on a call, a man in Dallas, and he said, “You know what’s happened? A neighbor of mine. He’s got a swimming pool, a heated swimming pool.”<br> <br> David: Heated swimming pool.<br> <br> Kevin: And it’s iced over like an ice rink. So, things are not running hot in Texas, either.<br> <br> David: No. Well, and we’ll get back to running hot in just a minute.<br> <br> Kevin: Speaking of that, because we’ve been talking about inflation and the inflation numbers, we’ve for years looked at it and said, “Well, how do you really calculate inflation?” We were talking about hot dogs last week and chocolate, things that affect our lives. But when CPI comes out, a lot of times it doesn’t tell the whole story. Look at the rents, the delinquencies and rents affecting the CPI number right now.<br> <br> David: Well as you consider the world, you have the developed and developing, if you want to put it in those terms. In the developing world, most of the money is spent on housing and food. Reuters pointed out this last week that through a mix of currency depreciation, rising commodity prices and then coronavirus disruptions, food inflation soared 14% last year in Latin America’s largest economy. And they said that was the largest increase in two decades, with the headline figure masking the hikes in the big staples. 76% jump in rice and a doubling in soy oil prices. Again for us, it’s not as big a deal because maybe in the developed world, we spend a little less as a total percentage of our income on housing and food. But Bill King pointed out that due to mortgage delinquencies and moratoriums, even the part of CPI here in the United States, which factors in rents. In fact, it’s about a 40% contribution to the core CPI calculation, very understated this last time. What he pointed out is there’s a 3% discrepancy between effective rents and asking rents, which depresses the rents calculation in BLS, the Bureau of Labor Statistics, CPI calculations—<br> <br> Kevin: This is because of delinquencies, right? Right now the rents are not caught back up, the COVID year, whatever it is.<br> <br> David: That’s right. So when renters become current, effective rents as a part of CPI calculations will rise significantly enough to push the inflation here ...
