EES: Pizzaflation and the US Dollar collapse

Sometimes the best economic analysis comes anecdotally.  Why not explain the most important economic issue of our day with America's favorite food: PIZZA.  As we explain in our book Splitting Pennies - Understanding Forex, the real reason of inflation is because of monetary policy, not supply and demand.  For a basic primer on Inflation, you can checkout this book "What you should know about Inflation." 

In case you didn't know, facts about Pizza

Pizza is actually America's favorite food.  The Atlantic covered a DOA report that showed the cheesy stats:

Like football, pop music, and democracy itself, pizza follows in the long American tradition of things that began overseas before the United States imported, violently altered, and eventually defined the institution. Although the first pizza shops didn't open in the U.S. until the early 20th century, hundreds of years after the original Neapolitan pies, we now spend $37 billion a year on pizza, accounting for a third of the global market. The obsession deepens. On any given day, about 13 percent of Americans eat pizza, according to a new report from the Department of Agriculture. One in six guys between the ages of two and 39 ate it for breakfast, lunch, or dinner today. In part due to this obsession, per capita consumption of cheese is up 41 percent since 1995. Drawn from the report, here are seven facts about Americans and pizza, presented free of moralizing comments about whether or not it is healthy or sensible for the American diet to consist so overwhelming of bread adorned with tomato-cheesey gloop.

Pizza, is actually an AMERICAN food, brought to America by the Italians.  Pizza was invented in Italy, but in Italy, Pizza is completely different, and not very popular.  In fact, Pizza is most popular in America.  It's more American than Apple Pie.  Check it out:

In 1905, a slice of pizza cost five cents. During the Depression, when families did not have much money, pizza became popular with everyone in the United States. Families were eating different types of pizza on the east and west coasts. A thick-crust pizza was called double-crust pizza or west coast pizza. When they had a large exhibit about pizza at the Texas State Fair, more people inquired about this food than any other.The first recipe for pizza appeared in a fundraising cookbook published in Boston in 1936. The recipe, for Neapolitan pizza, was made by hand. Dough had to be hand-stretched by pizzaiolos and housewives until it was half an inch thick. The pizza had cheese, tomatoes, grated parmesan cheese, and olive oil. Surprisingly, the dough was not made by hand, but cooks were told to buy it at a good Italian bake shop.However, pizza was mostly limited to Italian immigrant communities until after World War II, when American soldiers returning from Italy still wanted their pies. Popularity spread, and various American styles developed. Pizzeria Uno is credited with the invention of the Chicago deep dish pizza in 1943. This is known as tomato pie and was baked in rectangular pans in bakeries. Its crust was extra thick and it had seasoned tomato puree and was dusted with Romano cheese before it went into the oven. Some eventually had meat and thick cheese, and it was so thick, it often had to be eaten with a knife and fork.

The American Dollar is collapsing

From five cents a slice to $20 a Pizza.  What happened?  During this time, the US Dollar went down by more than 95%.  Let's take a look at one of America's favorite Pizzas, Numero Uno Pizza.  For those of you who have not had the pleasure to live in the greater Los Angeles area, where Numero Uno has had 95% name recognition, Numero Uno Pizza is a household name.  Interestingly, Numero Uno was founded in Los Angeles right around the time Nixon created Forex; 1970.  We've obtained an old Numero Uno menu (we think though, it's from the 80s) that shows prices from that time:

Wow!  .85 House Wine, less than $5 for a Carafe!  

Now take a look at prices we've lifted from current NU store sites, such as Numero Uno Palmdale:

The most popular NU pizza is the S5 "Slaughterhouse 5" which currently stands at $16.95.  We confirmed with the manager of Palmdale location that indeed; prices are due for a rate hike in January.

From $10.85 to $16.95 isn't too bad, Pizzaflation is not nearly as bad as inflation in other markets, most notably, real estate, groceries, coffee, and other items.  Using an inflation calculator, $1 in 1970 is about $6.21 today.  If the menu is from 1985, the S5 should be $24.29.  Other NU stores have it priced at $19.99.  In any case, for older folk, $20 is a lot to pay for a Pizza, in their mind.  But that's only because of memory, of times past.  Inflation is a slow subtle tax.  From a 'real dollar' perspective, Numero Uno Pizza is cheap.

Let's understand the second component of inflation that's less obvious - the deterioration of QUALITY.  You can get a Pizza today for $5 - but it's a bunch of crap.  Like any product, you get what you pay for.  This part of inflation, the decline in quality, is less obvious but more damaging.  Every year, products get a little worse and worse.

The real cause of Pizzaflation

Real analysts must always seek the CAUSALITY  

Inflation happens only for one reason:  Central Bank prints more currency.  More currency, chasing the same or fewer goods and assets, makes the price go up.  It's really simple!  QE (Quantitative Easing) has been rampant in recent years.  Fortunately for consumers, most inflation has happened in financial markets, real estate, and other markets.

This phenomenon has been covered well in "The Burrito Index:"

In our household, we measure inflation with the "Burrito Index": How much has the cost of a regular burrito at our favorite taco truck gone up?

Since we keep detailed records of expenses (a necessity if you’re a self-employed free-lance writer), I can track the real-world inflation of the Burrito Index with great accuracy: the cost of a regular burrito from our local taco truck has gone up from $2.50 in 2001 to $5 in 2010 to $6.50 in 2016.That’s a $160% increase since 2001; 15 years in which the official inflation rate reports that what $1 bought in 2001 can supposedly be bought with $1.35 today.

If the Burrito Index had tracked official inflation, the burrito at our truck should cost $3.38—up only 35% from 2001. Compare that to today's actual cost of $6.50—almost double what it “should cost” according to official inflation calculations.

Since 2001, the real-world burrito index is 4.5 times greater than the official rate of inflation—not a trivial difference.

Between 2010 and now, the Burrito Index has logged a 30% increase, more than triple the officially registered 10% drop in purchasing power over the same time.

Those interested can check the official inflation rate (going back to 1913) with the BLS Inflation calculator by clicking here.

My Burrito Index is a rough-and-ready index of real-world inflation. To insure its measure isn’t an outlying aberration, we also need to track the real-world costs of big-ticket items such as college tuition and healthcare insurance, as well as local government-provided services. When we do, we observe results of similar magnitude.

The takeaway? Our money is losing its purchasing power much faster than the government would like us to believe.

It's important for consumers to understand, Pizzaflation is not caused by Pizza makers.  Numero Uno actually is doing a great job keeping prices low, because their food cost, rent, and other costs, are all exploding parabolic.

Los Angeles has the highest rent burden in America:

Overall, rents in Los Angeles have doubled since the 1970s:

But of course, that's not counting other various fees, taxes, increased regulatory costs, increased insurances due to higher crime rates, and other factors.  Pizzaflation has hit Los Angeles hard, creating a 'double whammy' for businesses like Numero Uno.  And with LA's median income flat since 1970, it makes one wonder who can afford a $20 Pizza.  But the remaining Numero Uno stores are mostly packed and have great reviews, so it seems that it takes something really Magic to survive the pressure of the Fed.

To learn more about how the Fed decreases the value of the US Dollar via Quantitative Easing, checkout Splitting Pennies - Understanding Forex - your pocket guide to make you a Forex genius!  

The good news, Forex is artificial so you can learn about it online.  It's all digital.  If you want the best Pizza you've ever had in your life - you'll have to drive all the way to Palmdale, California and visit Numero Uno Palmdale.

http://www.zerohedge.com/news/2016-09-29/pizzaflation-and-us-dollar-collapse

PANIC, ANXIETY SPARK RUSH TO BUILD LUXURY BUNKERS FOR L.A.'S SUPERRICH

Illustration by Mario Wagner

Oscar winners, sports stars and Bill Gates are building lavish bunkers — with amenities ranging from a swimming pool to a bowling alley — as global anxiety fuels sales and owners "could be the next Adam and Eve."

Given the increased frequency of terrorist bombings and mass shootings and an under-lying sense of havoc fed by divisive election politics, it's no surprise that home security is going over the top and hitting luxurious new heights. Or, rather, new lows, as the average depth of a new breed of safe haven that occupies thousands of square feet is 10 feet under or more. Those who can afford to pull out all the stops for so-called self-preservation are doing so — in a fashion that goes way beyond the submerged corrugated metal units adopted by reality show "preppers" — to prepare for anything from nuclear bombings to drastic climate-change events. Gary Lynch, GM at Rising S Bunkers, a Texas-based company that specializes in underground bunkers and services scores of Los Angeles residences, says that sales at the most upscale end of the market — mainly to actors, pro athletes and politicians (who require signed NDAs) — have increased 700 percent this year compared with 2015, and overall sales have risen 150 percent. "Any time there is a turbulent political landscape, we see a spike in our sales. Given this election is as turbulent as it is, we are gearing up for an even bigger spike," says marketing director Brad Roberson of sales of bunkers that start at $39,000 and can run $8.35 million or more (FYI, a 12-stall horse shelter is $98,500).

Adds Mike Peters, owner of Utah-based Ultimate Bunker, which builds high-end versions in California, Texas and Minnesota: "People are going for luxury [to] live underground because they see the future is going to be rough. Everyone I've talked to thinks we are doomed, no matter who is elected." Robert Vicino, founder of Del Mar, Calif.-based Vivos, which constructs upscale community bunkers in Indiana (he believes coastal flooding scenarios preclude bunkers being safely built west of the Rockies), says, "Bill Gates has huge shelters under every one of his homes, in Rancho Santa Fe and Washington. His head of security visited with us a couple years ago, and for these multibillionaires, a few million is nothing. It's really just the newest form of insurance."

A hidden door by Creative Home Engineering leads to a secret passageway that connects to an underground bunker.

Rising S Bunkers installed a 37-room, 9,000-square-foot complex in Napa Valley for an Academy Award-winning client that rang in at $10.28 million, with a bowling alley, sauna, jacuzzi, shooting range and an ultra-large home theater. Swimming pools, greenhouses, game rooms and gyms are other amenities offered. This year, on another Napa Valley property, the company constructed a $9 million, 7,600-square-foot compound with horse stables and accommodations for 12, along with four escape tunnels leading to outlets on the estate, multiple hidden rooms — in case "you let someone in whom you do not fully trust," says Lynch — and an aboveground safe house "disguised as a horse barn." The company also is designing a $3 million bunker for "a major sports figure from Southern California."

READ MORE

'Idiocracy' to Return to Theaters as Election Season Reminder

The company's best-selling bunkers for L.A. are 10 by 50 feet, start at $112,000 and have their own power sources, water supplies and air-filtration systems: "These complexes accommodate families of four or five and are self-sustaining," says Roberson, adding: "You can pretty much put a palace underground anywhere there is physically enough room." Regardless, Ellia Thompson, chair of land use practice at Ervin Cohen & Jessup in Beverly Hills, notes that zoning guidelines vary throughout L.A., so one should check with the city department of building and safety about permits: "A special permit may be required if you are digging out more dirt than certain basement quantities."

Business has doubled in the past year at Ultimate Bunker, which just built a $10 million complex on a 700-acre property a few hours north of Minneapolis for a client "known for television, who has his own show," says Peters. Two 1,000-square-foot bunkers (one for storage) are connected by 300 feet of tunnels to the main 6,800-square-foot home as well as three guesthouses that each boast a $200,000 bunker "to take care of his family and friends," says Peters. "It's like an underground mansion with more mansions on top of it."

Al Corbi, president and founder of S.A.F.E. (Strategically Armored & Fortified Environments), with offices in West Hollywood, says that his most spectacular projects were $100 million subterranean residences, one for a global venture capitalist and the other for an East Coast developer to mimic the Universal CityWalk promenade, with a pizzeria and wellness outpost that, he says, "resembles a Burke Williams day spa." Corbi says both bunkers protect from nuclear holocaust (8 feet of soil blocks radioactive fallout), pandemic (a positive-pressure air system with HEPA filters keeps contaminants out), electromagnetic pulses and solar flares (using a metal encasement), among other threats. "Power technology has improved tremendously thanks in part to Tesla and lithium-ion batteries that only degrade a maximum of 10 percent after 30 years," says Corbi. "And now there is food with a 25-year minimum shelf life. [The owners] could be the next Adam and Eve." (Note to L.A. chefs, however: The rations are grim, ranging from beef Stroganoff to chili.)

READ MORE

Hollywood's Newest Home Trend: Safe Rooms

When it comes to the details of secret passageways and hidden doors, many in Hollywood turn to Arizona-based Creative Home Engineering. "We've seen year-over-year growth of about 20 percent, but perhaps more telling is an increasing percentage of clientele who need their secret door to employ high-security features," notes president Steve Humble, who says before, 60 percent of secret doors in cigar rooms, home theaters, children's bedrooms and the like were for novelty value. "Nowadays, 80 percent are used for security. In the past year, I have performed installations inside two nuclear-protected complexes with more than 10 secret doors each, one in the L.A. area owned by a plastic surgeon."

Film fantasies play a part in the choice of secret entrances. "Many of my clients come to me knowing what movie secret door they would like duplicated," says Humble, who cites as top inspirations Indiana Jones and the Last Crusade, the Batman and James Bond franchises, Mr. & Mrs. Smith and Goonies, on which a popular access control device that "requires that a certain sequence of notes be played on the piano to get the door to open" is based. There's also Get Smart: "At this moment, we are converting a phone booth [inside a private residence] so that when the user dials the correct number, the back panel opens to grant access to a secure area." He adds: "I can tell you that we've built secret doors for many of the most recognizable and highly awarded directors and celebrities in Hollywood. There are a lot of Oscars and Emmys tucked away safely behind my secret doors."

1. A floor plan for an $8.35 million, 6,000-square-foot bunker from Texas company Rising S Bunkers includes a decked-out game room.

2. The largest swimming pool that Rising S has built measures 40 feet.

3. Fitness rooms are a must to compensate for a lack of outside activity.

4. Natural light tubes and ultraviolet LED lamps promote growth in underground gardens of consumable plants and vegetables.

5. Theaters seat as many as 20 people and come with 10-foot screens.

6. Rising S has seen garages with 15 vehicles, including Rolls-Royces, muscule cars and armored personnel carriers (one client has three).

http://www.hollywoodreporter.com/news/bunker-builders-anticipate-lucrative-trumpocalypse-932748

Secret Truth Revealed about THE REAL DEBATE

The Elite have invested billions of dollars over a period of 60 years to create a population of semi-conscious happy consumers in the US (and are attempting to do so globally).  The form changes from time to time, but the essence is the same: don't mess with the status quo.  As we explain in Splitting Pennies - Understanding Forex - this is no where more obvious than financial services.  In fact, a large part of the 'dumbing down' campaign is designed to make you fire from the right brain, and the reptilian brain (ribbit).  That means they encourage sports, violence, and basically anything vulgar and stupid.  It's not only designed to destroy your family, it's designed to destroy a civilization.  And it's working!  For those who are curious about this mega-brainwashing-system that went into place during the 50's and 60's and now has a complete domination over almost all aspects of American life, checkout the following books: Virtual Government: CIA Mind Control Operations in America, Population Control: How Corporate Owners Are Killing Us.

The Real Debate

Part of this social control paradigm they've created is turning politics into a big circus-style entertainment.  TRUMP fits the bill perfect here, as our entire political system has become a big reality show.  Tonight's event, used to be one of much intellectual rigor.  To understand what 'debate' is - read this book "Logic and Contemporary Rhetoric" - a MUST read for any intellectual, trader, thinker, or someone who enjoys to understand how things work.  Modern politicians, don't bother to read this book, it will only ruin your career (you shouldn't read in fact, just practice smiling and saying what it says on the teleprompter).

There is practically no difference who the President is anymore.  Even Trump who is like the 'Trump' card, the wildcard candidate, could not likely greatly change the Corporatocracy currently running Washington, or he'd risk imploding it and in the process bankrupting himself.  Unfortunately, there isn't any 'fix' for the system, so no matter how crafty and clever candidates like Trump may seem, even Nuclear war couldn't shake the resolve of the lunatic psychopaths running the world.  The only thing that could really change the system, would be mass non-cooperation (say, 100 Million people stay at home, turn off their TVs.  It would cause a revolution).  With the constant flow of drugs, money, and cheap entertainment, ("the spice must flow") it's guaranteed that for the current generation, the bread and games approach will work.  As long as they're kept fat and happy, they're happy to line up for the slaughter.

The REAL Debate, doesn't happen on TV.  It happens at the Federal Reserve Bank (Or, at the private Residence of some Rockefeller level bankers) - these debates involve topics such as who will be the next Fed Chairman, what country will the US invade next, and what the interest rate policy should be?  (The debate about interest rates, that doesn't last long, not more than a few seconds, long enough for everyone to murmur 'agree' or 'ditto').  And here, in these private chambers, is where the REAL failure happened.  Some Rockefeller sidekick, like Helicopter Ben, will have some popular warped theory about how negative rates are good to stimulate growth, so the valves should be turned on full.  Fast forward almost 10 years, and the same Elite group finally realized that, economically speaking, it makes more sense to give money to people, not banks.  If by strange chance, those advisors with that realization, could have been in the meeting we call The Real Debate, maybe QE wouldn't exist, we'd live in a different world, a more real world, based on real numbers and not aritifically inflated data.  But, we don't live in that world so it's pointless to think about. 

The Real Debate, happens everyday in the FX markets.  Traders on one side (the buy side) push hard to topple their counterpart, the sell side.  That's the Real Debate.  You can watch it live for only $1 Click here to start to watch the real debate for only $1.

Politicians don't call the shots anymore.  If they ever did, is another question.  The Real Debate, it's happening right now on Zero Hedge.  Turn off your TV - and join!

If you want a quick Forex education, checkout Splitting Pennies - the pocket guide designed to instantly make you a Forex genius!

If you want to get started looking at investing, checkout Fortress Capital Forex

CFTC fines Russia bank $5 million for $36 billion of phony ruble-dollar trades -

The U.S. Commodity Futures Trading Commission fined a Russia bank $6 million Monday for executing "fictitious and noncompetitive" Russian Ruble - U.S. dollar futures contracts on the Chicago Mercantile Exchange.

The CFTC brought the enforcement action against VTB Bank, headquartered in St. Petersburg, Russia, and its subsidiary VTB Capital PLC.

VTB Capital is a U.K.-incorporated bank.

The CFTC’s order required VTB Bank and VTB Capital to jointly and severally pay a $5 million civil penalty.

VTB Bank didn't have the capital base to hedge a large position in ruble - dollar contracts, the CFTC said.

So between December 2010 and June 2013, VTB Bank and VTB Capital executed on the CME over 100 block trades in RUB/USD futures contracts, with a notional value of about $36 billion.

The purpose of the trades was to transfer VTB’s cross-currency risk to VTB Capital at prices more favorable than VTB could have obtained from third-parties.

VTB Capital then hedged the cross-currency risk in OTC swaps with various international banks.

That allowed VTB Bank to accomplish through risk-free, non-arms-length transactions in the futures market what it couldn't do through the swaps market.

The block trades were fictitious sales, the CFTC said. They were done without risk to VTB Bank and reported by the CME at prices that weren't bona fide prices.

Non-competitive and fictitious trades violate CFTC rules.

VTB is the former Vneshtorgbank. The Russian government controls most of the stock in VTB. The Bank of Moscow is VTB's biggest subsidiary.

The CFTC said VTB Bank and VTB Capital cooperated with the U.S. investigation.

The UK Financial Conduct Authority helped the CFTC in the investigation.

_____

Richard L. Cassin is the publisher and editor of the FCPA Blog. He'll be the keynote speaker at the FCPA Blog NYC Conference 2016.

http://www.fcpablog.com/blog/2016/9/23/cftc-fines-russia-bank-5-million-for-36-billion-of-phony-rub.html 

OPEN A FOREX ACCOUNT - YOU JUST MIGHT GET LUCKY

Slowly... Then All At Once

Submitted by Howard Kunstler via Kunstler.com,

The staggering incoherence of the election campaign only mirrors the shocking incapacity of the American public, from top to bottom, to process the tendings of our time. The chief tending is permanent worldwide economic contraction. Having hit the resource wall, especially of affordable oil, the global techno-industrial economy has sucked a valve in its engine.

For sure there are ways for human beings to inhabit this planet, perhaps in a civilized mode, but not at the gigantic scale of the current economic regime. The fate of this order has nothing to do with our wishes or preferences. It’s going down whether we like it or not because it was such a violent anomaly in world history and the salient question is: how do we manage our journey to a new disposition of things. Neither Trump or Clinton show that they have a clue about the situation.

The quandary I describe is often labeled the end of growth. The semantic impact of this phrase tends to paralyze even well-educated minds, most particularly the eminent econ professors, the Yale lawyers-turned-politicos, the Wall Street Journal editors, the corporate poobahs of the “C-Suites,” the hedge fund maverick-geniuses, and the bureaucratic errand boys (and girls) of Washington. In the absence of this “growth,” as defined by the employment and productivity statistics extruded like poisoned bratwursts from the sausage grinders of government agencies, this elite can see only the yawning abyss. The poverty of imagination among our elites is really something to behold.

As is usually the case with troubled, over-ripe societies, these elites have begun to resort to magic to prop up failing living arrangements. This is why the Federal Reserve, once an obscure institution deep in the background of normal life, has come downstage front and center, holding the rest of us literally spellbound with its incantations against the intractable ravages of debt deflation. (For a brilliant gloss on this phenomenon, read Ben Hunt’s essay “Magical thinking” at the Epsilon Theory website.)

One way out of this quandary would be to substitute the word “activity” for “growth.” A society of human beings can choose different activities that would produce different effects than the techno-industrial model of behavior. They can organize ten-acre farms instead of cell phone game app companies. They can do physical labor instead of watching television. They can build compact walkable towns instead of suburban wastelands (probably even out of the salvaged detritus of those wastelands). They can put on plays, concerts, sing-alongs, and puppet shows instead of Super Bowl halftime shows and Internet porn videos. They can make things of quality by hand instead of stamping out a million things guaranteed to fall apart next week. None of these alt-activities would be classifiable as “growth” in the current mode. In fact, they are consistent with the reality of contraction. And they could produce a workable and satisfying living arrangement.

The rackets and swindles unleashed in our futile quest to keep up appearances have disabled the financial operating system that the regime depends on. It’s all an illusion sustained by accounting fraud to conceal promises that won’t be kept. All the mighty efforts of central bank authorities to borrow “wealth” from the future in the form of “money” — to “paper over” the absence of growth — will not conceal the impossibility of paying that borrowed money back. The future’s revenge for these empty promises will be the disclosure that the supposed wealth is not really there — especially as represented in currencies, stock shares, bonds, and other ephemeral “instruments” designed to be storage vehicles for wealth. The stocks are not worth what they pretend. The bonds will never be paid off. The currencies will not store value. How did this happen? Slowly, then all at once.

We’re on a collision course with these stark realities. They are coinciding with the sickening vectors of national politics in a great wave of latent consequences built up by the sheer inertia of the scale at which we have been doing things. Trump, convinced of his own brilliance, knows nothing, and wears his incoherence like a medal of honor. Clinton literally personifies the horror of these coiled consequences waiting to spring — and the pretense that everything will continue to be okay with her in the White House (not). When these two gargoyle combatants meet in the debate arena a week from now, you will hear nothing about the journey we’re on to a different way of life.

But there is a clear synergy between the mismanagement of our money and the mismanagement of our politics. They have the ability to amplify each other’s disorders. The awful vibe from this depraved election might be enough to bring down markets and banks. The markets and banks are unstable enough to affect the election.

In history, elites commonly fail spectacularly. Ask yourself: how could these two ancient institutions, the Democratic and Republican parties, cough up such human hairballs? And having done so, do they deserve to continue to exist? And if they go up in a vapor, along with incomes and savings, what happens next?

Enter the generals.