Zero Hedge: In late August, the Fed unveiled its new flexible Average Inflation Targeting (fAIT) paradigm which while still lacking strict forward guidance and operational parameters – the Fed expects rates to be at zero at least until 2023.
The problem emerges that depending on where one looks, one can make the argument that much of what US consumers are spending money on is seeing price increases that are already at – if not above – the Fed’s inflation overshoot targets.
Nobody has made that point better than the WSJ, which over the weekend wrote that “Inflation Is Already Here—For the Stuff You Actually Want to Buy.”
“if it feels like the price of everything you buy has been soaring, that’s because it has—even as central bankers everywhere worry about the danger of deflation.” Read More …
Opinion: The constant debasement of currency caused by printing new money is going to bring inflation to every economy in the world. As the old 1989 song made famous by Randy Travis says, “It’s just a matter of time”
Someday, someway you’ll realize that you’ve been blind
Yes darling, you’re going to need me again
Its just a matter of time”
The Federal Reserve’s goal of keeping interest rates at near zero until 2024 is also a bit misleading in that the Fed only controls short term rates. Long term rates are controlled by supply and demand, meaning if inflation keeps rising the long rates could go up, Fed or no Fed.
“Go on, go on til you reach the end of the line
Cause I know you’ll pass my way again
Its just a matter of time”
The end of the line is hyperinflation. We do not have to look far to see what it looks like. Venezuela, once the wealthiest South American nation, gave into Hugo Chavez’s brand of socialism in December 1998 with 80% of the vote.
By February 1999, Venezuela saw sweeping and radical shifts in social policy, moving away from the government officially embracing a free-market economy and neoliberal reform principles of income redistribution and social welfare programs.
First, Chávez promised that he would begin his presidency by abolishing Venezuela’s old two-party political system, opening up political power to independent and third parties. Second, Chávez promised to end corruption. Third, Chávez promised to eradicate poverty in Venezuela.
By the time Chavez was finished in 2015 Venezuela was in a full blown economic crisis which intensified under the Maduro governmet, exacerbated by low oil prices in early 2015, and a drop in Venezuela’s oil production from lack of maintenance and investment.
In 2016 the country’s ongoing socioeconomic and political crisis led to a hyperinflation rate of 800%, over 4,000% in 2017, and about 1,700,000% in 2018.
It’s just a matter of time.
See The 1% and Revelation: Do Not Harm the Oil and Wine here.