Inflation – Stealth Robbery


Zero HedgeIf you think that price inflation runs at about 1.6% you have fallen for the BLS’s  (Bureau of labor statics) CPI myth. Two independent analysts using different methods — the Chapwood Index and – prove that prices are rising at a far faster rate, more like 10% annually and have been doing so since 2010.

This article discusses the consequences of price inflation suppression, particularly in the light of Jerome Powell’s Jackson Hole speech when he downgraded the importance of price inflation in the Fed’s policy objectives in favour of targeting employment.

It concludes that the reconciliation between the BLS CPI figure and the true rate of price inflation is inevitable and will be catastrophic for the Fed’s policy of suppressing interest rates, its maximisation of the “wealth effect” of inflated financial asset prices, and for the dollar itself.” Read More …

Opinion: Definitions:

Inflation is a general rise in price level relative to available goods resulting in a substantial and continuing drop in purchasing power in an economy over a period of time.

Inflation can cause hyperinflation. Soaring prices cause people to hoard, creating a rapid rise in demand chasing too few goods.

Hyperinflation tends to occur during a period of economic turmoil caused by the rapid plunge in a nation’s currency (Venezuela, Lebanon).

It is important to note that the Federal Reserve’s only real weapon against inflation is to raise short term interest rates to slow borrowing and cool the economy.

While the Fed controls short term interest rates, the market (supply and demand) controls long term rates. If/when the nations stop loaning the US money because of unsustainable debt levels, longer term interest will rise Fed or no Fed.

And $30,000,000,000,000 (trillion) is a lot of debt.

Since the US dollar is backed not by gold but the full faith and credit of the nation, if/when other nations stop financing our debt by buying Treasury notes and bonds, the US dollar will plunge. If/when that happens, rapid hyperinflation, a 50% monthly rise in prices of everything is the result.

I can just picture the lament: “We should have realized that printing money to finance wars and recessions was dangerous! We should have paid down debt! How do we explain this to our children who now have no future?”

Quantitative Easing, creating money debases existing money. The US and EU now have no alternative when crisis strikes but print. It is a race to the bottom.

“When He opened the third seal, I heard the third living creature say, “Come and see.” So I looked, and behold, a black horse, and he who sat on it had a pair of lscales  in his hand. 6 And I heard a voice in the midst of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not harm the oil and the wine.” Revelation 6:5-6

The end result is in Bible prophecy, see “The 1% and Revelation: Do not Harm the Oil and Wine” here