Category: Inflation
The analysis published under this category are as follows.
Wednesday, June 16, 2021
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! / Economics / Inflation
By: Nadeem_Walayat
I know it can get a bit tiring to hear me bang on with the mantra of rampant money printing inflation, BUT one can tend to get lost in the detail i.e. looking at individual stocks and assets and forget the BIG PICTURE which really is one of RAMPANT MONEY PRINTING INFLATION!
For instance the stimulus that all nations have implemented is far in excess of the temporary loss of GDP due to Covid i.e. the US suffered a 10% drop from peak to trough in GDP, about $2 trillion's worth but has printed $5 trillion in response to which is about 25% of GDP!
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Wednesday, June 16, 2021
The Federal Reserve and Inflation / Economics / Inflation
By: John_Handbury
The Federal Reserve a$$holes puckered up when the April CPI/PPI figures came in, and probably puckered up even more when the May figures came in. These Fed nerds (who never got the girl/guy in high school), are dictating the monetary policy for the world. They are providing immense stimulation to the economy, yet have decided that any inflation arising from it is “transitory”. These stimuli include the following major impacts on supply and demand of goods that can lead to inflation of prices:
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Tuesday, June 15, 2021
Transitory Inflation Debate / Economics / Inflation
By: Michael_Pento
Inflation is running white-hot right now, and the reason is clear. It is because the Treasury poured $6 trillion into the economy between March of 2020 to March of 2021. That amounts to nearly $50,000 per US family in the name of pandemic relief. According to David Stockman, the government's largess was equal to 7.5 times the $800 billion of economic growth lost due to the various lockdowns and restrictions—both self-imposed or mandated. This time around the money wasn't just sent to Wall Street, as it was in the wake of the Great Financial Crisis of 2008. Covid-19 was a perfect excuse to deploy Modern Monetary Theory (MMT) directly to state and local governments, consumers, and businesses as well.
In other words, the government didn't just re-liquefy the banking system and then maybe hope consumers would receive some of the monetary crumbs as an ancillary consequence. The various virus-related rescue packages circumvented banks and pushed funds directly to the mass population. Paying people to lay fallow while at the same time giving them money to actually increase their consumption habits is a perfect recipe for rapidly rising Consumer Price Inflation. However, such a feat cannot be duplicated anytime soon without destroying the US dollar and the full faith and credit in our sovereign bond market.
Wednesday, June 02, 2021
Biden’s Alternate Inflation Universe / Economics / Inflation
By: Gary_Tanashian
As Biden Speaks, remember the economy is run by the Fed and it is run by inflation
Of course, a career politician will be adept at framing the narrative just right, adding to it, tweaking it and layering on fancy words and concepts in order to veil the true and unbelievably simple fact that the inflation started under a very different presidential administration and continues to this day. The only difference is that the party that won the election gets to take a bow for the broad results that have little or nothing to do with them.
Biden goes on offensive against economic critics, argues rising wages show his agenda is working
Well, his agenda was to push rising employment costs into the economy with the inflation the Fed created out of thin air. So that is true. I am not against raising minimum wages under this vile inflationary system because low income people cannot keep up with the pace of the inflation the Fed has created. Under an inflationary regime, an inflationary (Keynesian) system, you can’t go with the old conservative method of letting each earn his or her way based on merit. At some point – due to inflation – the goalpost has been moved too far away.
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Monday, May 31, 2021
Fed Offers No Holiday from Inflation / Economics / Inflation
By: MoneyMetals
Heading into Memorial Day weekend, American motorists will see the highest prices at the pump since 2014, according to AAA. Gas prices now average $3.04 a gallon nationally – reflecting a jump of more than $1.00 compared to the same time last year.
A rising gasoline price is just one of many emerging symptoms of a larger inflation problem:
- A lack of housing inventory, low interest rates, and surging costs for building materials are pushing home prices through the roof.
- Billionaire Warren Buffett recently complained that he is seeing significant inflation pressures throughout the supply chains of businesses he owns.
- Beef is becoming increasingly unaffordable for many grocery shoppers, and rising food costs are forcing already beleaguered restaurants to hike menu prices.
Thursday, May 27, 2021
Are US Inflation Fears Destabilising the Global Markets? / Economics / Inflation
By: Sumeet_Manhas
The US dollar has enjoyed renewed highs of late, with this trend at least partially the result of forex positioning and a pronounced increase in net short positions as investors brace themselves for a depreciation in the value of the greenback.
However, this also betrays rising rates of US inflation, which recently peaked at 2.6% and pushed the dollar even higher against both the pound and the Euro.
But are rising inflation fears beginning to destabilise the global markets, and what does this tell us about the influence of inflation on stocks and shares throughout the world?
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Wednesday, May 26, 2021
Inflation Easing, Now What? / Economics / Inflation
By: Monica_Kingsley
S&P 500 refused to keep early gains, and reversed back into no man‘s land – on little convincing volume. For now, we remain chopping below my 4,180s level, conquering which on a closing basis would a bullish achievement. Until that happens on convincing internals, fake moves in both directions would remain with us.
The Fed telegraphing the talk about talking taper is a first step in preparing the markets not to get surprised by the actual deed, but how far is that one really? Stocks, bonds and currencies aren‘t reacting much – it‘s only commodities that are in consolidation mode, but this can be chalked down to inflation expectations calming down over the prior three trading days. Until the Fed truly moves or makes its forward guidance as unequivocal as can be in this respect, the markets would be in a doubting attitude (or at a minimum, a wait and see one):
(…) The market simply isn‘t convinced the Fed is serious about taking on inflation through (gradual) removal of the punch bowl – or about shaping its forward guidance credibly this way (yet). Inflation expectations are cooling down a little, and the Treasury market is tracking them closely. But this doesn‘t mean that bonds are taking the central bank seriously – this move is part and parcel of the transitory vs. getting (practically permanently unless a Fed game changer arrives – still unlikely) elevated inflation readings debate.
While I think that the red hot CPI inflation would die down a little (i.e. not keep rising ever as steeply as was the case with Wednesday‘s data) once the year on year base to compare it against normalizes, a permanently elevated plateau of high and rising inflation would be a reality for more than foreseeable future simply because the Fed would be as behind as Arthur Burns was in fighting the 1970s inflation, and upward price pressures in the job market pressures would kick in.
Friday, May 21, 2021
Inflation Bunker Mentality: 'Striking' Similarities Between Now and the Inflationary 1970s / Economics / Inflation
By: The_Gold_Report
Sector expert Michael Ballanger examines the parallels between the present and the inflationary years of the mid-1970s, and also comments on how gold markets are responding.
For many of those following the writings of this "dithering old fool," who continues to hold an unfailing conviction in the strategic importance of gold and silver ownership in an otherwise out-of-control fiscal and monetary world, let me tell you a story about the 1970s.
I arrived in Saint Louis, Missouri, in the late summer of 1972, at the start of a magical four-year career as a student athlete at one of the top undergraduate business schools in the country. Populated largely by Jesuit educators, it also had many non-Jesuit professors in the twilight of their business careers that bestowed impressive anecdotes upon the collective psyches of the student population. In fact, it was a wonderful, coffee-sipping, Camel non-filter-chain-smoking finance professor who stood in front of the class in old De Smet Hall one morning, tripping the light fantastic about the implications of Richard Nixon abandoning the gold standard the year before and how it was going to cause massive inflation.
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Sunday, May 16, 2021
Wall Street Roiled by Hot Inflation Data: Is This REALLY “Transitory”? / Stock-Markets / Inflation
By: MoneyMetals
The Labor Department reported yesterday that the Consumer Price Index jumped 4.2% from the prior year. Although a big rise in the CPI had been expected, the actual number came in even higher than economists had forecast.
According to the CPI data, inflation in April accelerated at its fastest pace in more than 12 years. Higher prices showed up everything from used cars to lumber to energy to food.
If April’s rate of price increases were to persist for another 11 months, the annual CPI growth rate would be 10.3%. And that wouldn’t even account for items that the CPI excludes or understates.
Jerome Powell and other Federal Reserve officials have repeatedly insisted than any rise in inflation this year will be “transitory.” They cite base effects from last year’s economic lockdown and supply bottlenecks they expect to be temporary.
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Thursday, May 13, 2021
Peak Growth and Inflation / Economics / Inflation
By: Michael_Pento
The rates of growth and inflation are now surging in the U.S., but that shouldn't be a surprise to anyone. What else would you expect when the Federal government has sent $6 trillion dollars in helicopter money to state and local governments, businesses, and individuals over the past year. Then, at the same time, millions of homeowners are told they don't have to pay their mortgages. In addition, our central bank has printed trillions of dollars to push asset prices through record-high valuations and continues to create $120 billion each month in order to keep Wall Street happy.All the above is happening while the economy opens up due to the dissemination of COVID-19 vaccines. The markets have anticipated this economic boom and have now nearly fully priced it all in. For instance, home prices have soared by 12% year over year in February, which was the fastest increase in the past seven years. And, the total market cap of equities is now over 200% of GDP—about twice the level reached at the start of the Great Recession.
But that rate of change in growth and inflation will be peaking in the next two months. I'll explain why that is and what that means for investors?
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Tuesday, April 20, 2021
Inflation: First the Gain, Then the Pain… / Economics / Inflation
By: MoneyMetals
Gold and silver markets are exhibiting more signs of breaking out into a rally.
On Thursday, bond yields pulled back sharply. That helped fuel a new record in the Dow Jones Industrials. But the precious metals sector was an outperformer on the day, with mining stocks leading gold prices to a fresh multi-week high.
With the exception of palladium, precious metals markets have lagged behind other asset classes in 2021. That may be in the process of changing here in the second quarter.
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Tuesday, April 13, 2021
Biggest Inflation Threat in 40 Years Looms over Markets / Economics / Inflation
By: MoneyMetals
William Watts with MarketWatch sees the “biggest Inflation scare in 40 years” on its way. He expects massive amounts of stimulus coupled with a boom associated with easing COVID restrictions to generate a surge in prices like the nation hasn’t seen since the late 1970s to early 1980s.
The signs say Watts may be right. Commodities, with the exception of closely managed gold and silver prices, have been screaming higher in recent months. Wheat, corn, lumber, copper, steel, and a host of other key inputs have all spiked higher.
The jump is already being felt in consumer goods and construction, but the bulk of the price hikes may still lie ahead.
Tuesday, April 06, 2021
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending / Economics / Inflation
By: MoneyMetals
Gold and silver markets sprung higher on Thursday as April and second quarter trading kicked off. After suffering losses in the first quarter, precious metals may now be due for a spring rally.
The U.S. Dollar Index was up slightly this week. Regardless of how the dollar fares against other fiat currencies, investors can expect massive depreciation ahead in real terms. There is no end in sight to the inflationary cycle of spending, borrowing, and printing in Washington.
This week, President Joe Biden promoted a so-called infrastructure package that comes in at more than $2 trillion. That’s on top of $1.9 trillion in bailouts and giveaways finalized last month.
Much of the proposed “infrastructure” spending has nothing to do with paving roads, building bridges, or expanding ports. These sorts of transportation upgrades are slated to only get $115 billion. Meanwhile, Biden would spend $174 billion on electric vehicle subsidies and hundreds of billions more on various “green” and racial leveling programs.
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Wednesday, March 31, 2021
INFLATION - Wage Slaves vs Gold Owners / Economics / Inflation
By: Richard_Mills
Inflation is the rate at which prices within a basket of goods or services (called the consumer price index or CPI) rise or fall. When a currency falls, the ability of that unit of money to purchase goods and services weakens, ie., it takes more units of currency to buy the same basket of goods as before it weakened. The more a currency falls, the less you can buy with it because its purchasing power decreases. We call this devaluation/ loss of purchasing power.
Casey Research founder Doug Casey believes we often put the cart before the horse when thinking about inflation. The renowned investor, author, and speaker states,
“Inflation” occurs when the creation of currency outruns the creation of real wealth it can bid for… It isn’t caused by price increases; rather, it causes price increases.
Inflation is not caused by the butcher, the baker, or the auto maker, although they usually get blamed. Inflation is the work of government alone since government alone controls the creation of currency.
Indeed, governments in fiat economies can literally print paper money “out of thin air,” something impossible to do with a gold-backed currency. When the United States and most of the world was on the gold standard, dollars could be converted to gold at the US Treasury’s “gold window” @ 1 oz=US$35. However, the US government was only allowed to create as much money as could be backed by the gold in its faults. (it is often said, “the Fed can’t print gold” (or silver).
When gold goes up or down it is not inherently losing value; what has changed is the value of paper money, the fiat dollar. When you buy gold to resist inflation, ie., rising prices that eat away your savings by reducing your purchasing power, it is called a hedge against inflation.
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Sunday, March 07, 2021
The Case for Inflation / Economics / Inflation
By: John_Mauldin
Former Treasury Secretary Larry Summers recently pointed out that overstimulation risk will far exceed the “output gap” shown in the latest Congressional Budget Office economic projections.
What is an output gap? Gross Domestic Product measures (or at least tries to) economic growth. Economists also calculate “potential GDP,” which is how much the economy could grow, if every available worker and other resource were fully employed.
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Thursday, March 04, 2021
Get Ready for Inflation Mega-trend to Surge 2021 / Economics / Inflation
By: Nadeem_Walayat
So the US looks set to approve stimulus spending of $1,9 trillion for the US economy during 2021, with economists singing it's praises of how basically you get a free lunch, one of huge deficit spending at zero interest rate and no inflation. Understand $1.9 trillion is 10% of the US Economy! This for an economy that has already recovered from the covid depression and was destined to grow by about 3% in 2021. So what happens when one throws 10% of GDP at an economy that is growing by 3% per annum. No you don't get GDP growth of 13% per annum, yes it will boost US GDP for 2021 but not by 10%, perhaps by another 3%, so where does the other 7% or $1.5 trillion go? Into HIGHER PRICES, INFLATION! Some of which may be reflected in the official inflation indices.
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Wednesday, March 03, 2021
The Case Against Inflation / Economics / Inflation
By: John_Mauldin
For inflation to be a near-term threat, five things would have to happen this year:
- Vaccines and other measures bring the pandemic under control this summer in the US and other developed countries.
- Consumers use relief dollars, savings, and/or borrowing to quickly increase their spending on discretionary goods and services.
- This spending is large enough to exceed post-pandemic production capacity and spark price increases.
- The Federal Reserve lets the economy “run hot” and maintains its low interest rates and asset purchases.
- Congress and the Biden administration leave the fiscal spigots open by not raising taxes or cutting spending.
All these are possible. Are they likely?
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Tuesday, February 16, 2021
THE INFLATION MEGA-TREND QE4EVER! / Economics / Inflation
By: Nadeem_Walayat
US House Prices Real Estate Trend Forecast Review
Did the perma bears finally get their US house prices crash that they have been crowing so loudly for a decade now?
Firstly a recap of my existing US house prices trend forecast.
30th April 2019 - US House Prices Trend Forecast 2019 to 2021
Therefore my forecast conclusion is for a relatively weak continuation of the US housing bull market into late 2020 at a much shallower pace than experienced in recent years for a likely gain of just 3% over the next 2 years (Jan 2019 to Jan 2021) before entering into a downtrend going into 2021 i.e. Case Shiller 10 city Index (SPCS10RNSA ) rising from 225.9 (Jan 2019 data) to just 232.4 (Jan 2021 data) as illustrated by my trend forecast graph.
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Friday, February 12, 2021
UK Real Inflation is 15% to 20% - Grocery Price Rises Due to Rampant Money Printing / Economics / Inflation
By: Nadeem_Walayat
The Government and Bank of England would have you believe that Inflation is not a problem as they continue to focus the masses on their fake conjured out of thin air inflation indices such as CPI at just 1.4%, so as to allow the theft of real purchasing power to continue unabated as the government goes on an annual £400 billion spending spree, racking up debt that the Bank of England is busy monetization though QE, all so as to suppress real interest rates giving the illusion that the consumers are getting a free lunch, i.e. rampant government money printing deficit spending all without any inflationary consequences that the morons in the mainstream financial press are more than happy to regurgitate. However REAL inflation, that which people experience when they do their weekly shops is far higher than the fake 1.4%, REAL Inflation is at LEAST 15% and more like 20% as that is what happens when the Government starts paying 1/3rd of the workforce to stay at home, as has been the case for most of 2020 and continuing into 2021.
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Tuesday, January 05, 2021
Consumer Prices Are Not Reflecting Higher Inflation; Neither Is The CRB / Economics / Inflation
By: Kelsey_Williams
As of November 30th, the annual inflation rate for the year 2020 is 1.17% (CPI). And it is not likely to get a whole lot worse anytime soon.
When the Federal Reserve responded to the financial crisis of 2007-08 with hugely unprecedented monetary expansion efforts, many thought that it would lead to runaway inflation and collapse of the U.S. dollar. It didn’t; and the expected higher inflation rates did not occur.
What did happen is that consumer prices remained reasonably stable and we even saw lower prices in 2009 and 2015.
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