Good Morning all of you battle hardened survivors of the American Dream experience; your King of Simple News is on the air.

I hear that Christmas shopping will improve over last year. That the shopping season will begin to recover from the worst performance ever; which was in fact last year. How is that possible?

Jobs (while reported at a slower pace), continue to be lost in large numbers. Foreclosures also remain at near record levels. Federal and State government, cities, counties…are all bleeding some serious red ink. So once again, how can Christmas shopping be up?

A better question may be; why would any rational human-being go out Christmas shopping in the middle of the worst down turn and jobs market since the Great Depression? Is it to help out China so that they can lend our government your own money back? That’s what will happen; but that’s not the reason that people continue to shop.

Let’s not candy coat this one; Americans continue to shop because they don’t have the backbone, self confidence, guts, and internal fortitude to stop. It’s expected after all, regardless of economic conditions. What will we tell the relatives and the kiddies; that it’s a little tight around the old hacienda? That would be the truth but certainly tearing down the façade of success won’t do.

I’m going to give the same advice that I gave last year. Be the one in your family that has the guts to say, “Let’s cut back all the way around on shopping this year. Let’s just get together and have a nice meal and a nice day without the physical and financial drudgery of power shopping.” Every group needs a leader, be that leader and they’ll kiss you all over your forehead for saying what they so badly wanted to say but lacked the backbone.

Or, they might say, “I wanted to give a lot of lavish gifts this year, but since Mike is such a tightwad I guess I’ll have to go along with it.” After which they will close the door and say, “YES!”

Movin’ on to other subjects. I am constantly asked why we don’t have inflation. If printing ever greater amounts of fiat currency against a declining basis creates monetary inflation; then why aren’t prices skyrocketing? After all, I do continually say that specific actions create specific results. And they do.

Let’s apply Mikeronomics to this seemingly strange problem. If you own a restaurant in this day and age, the cost of doing business is in fact rising. Minimum wage was increased, food costs continue upward, and you need to raise prices to maintain profits. But unfortunately, business is already way off at your current price levels and some of your competitors are actually lowering prices. Burger King recently lowered the price of their double cheeseburger to less than it costs to make!

So what is a body to do under the above scenario? Go broke is the correct answer. Fold the proverbial tent; the monkey’s dead and the show’s over. Ya see, inflation can manifest itself in many different manners and the government knows it, but won’t tell. So when government math gurus report quite moderate retail price increases, what they are actually reporting is that the public is tapped out and cannot possibly stand any additional hits to the bottom line.

The inability to raise prices to survival levels closes business after business and results in higher unemployment, which in reality was caused by inflation. So once more, inflation has manifested, not in higher prices, but in higher unemployment. Why do you think government saved the banks first and Obama is now insisting that lending be restored? That’s the only skinny rabbit left in our skinny president’s magical hat.

At the same time, government has seized the moment to claim that inflation is tame and there is nothing to worry about. Spin ‘till ya win.

Homes, manufactured goods, and even some raw materials that were stockpiled, are being sold for less than replacement cost due to market conditions. Businesses are liquidating at deep, deep discounts to create cash flow, or, as they cease operation all together. Why do you think there are Christmas sales offering 75% off?

So what happens when the existing stockpiles of currently discounted goods are gone and charging for the real cost of replacement goods (including real estate) becomes a necessity?

What happens when the airlines have lost money to a point that they have to charge the actual cost of doing business…or go out of business?

What happens when the companies who have laid off thousands of employees have to raise their prices in order to ever have a chance at rehiring those displaced workers?

The result of the above scenarios is called hyperinflation without the benefit of new jobs, or hyper-stagflation to absolutely correct.

And now you know. . . “the rest of the inflation story.”