Inflation is dead!
At least that’s what you would think if you listen to government officials and talking heads in the financial media.
So, how is this victory over inflation working out for the average person?
Not so great.
Why do virtually all the mainstream pundits think the Federal Reserve has won the inflation fight?
Maybe it’s just wishful thinking. They want the Fed to win so it can go back to what it does best – creating more inflation with artificially low interest rates and quantitative easing.
Regardless, most of the mainstream punditry hyped the November CPI report as more positive news on the inflation front. The CNBC headline reflected the consensus – inflation “slowed” last month.
Except it really didn’t.
The “resilient” American consumer seems to be running out of gas.
Americans are still running up credit card debt but at a much slower pace. Meanwhile, borrowing for big-ticket items has cratered.
Total consumer debt rose by $5.2 billion in October, according to the latest data from the Federal Reserve. That was a relatively small 1.2% increase.
Are “greedy” corporations driving inflation? Could taxing billionaires solve the federal government’s fiscal problems?
According to President Joe Biden, the answer to both questions is yes.
And the correct answer is no.
No one is talking about the US trade deficit in the current fiscal year, but it is likely to be another record, bringing with it new rounds of trade sanctions and protectionism.
In this article, I explain why the twin deficit hypothesis will apply, bearing in mind a likely budget deficit outturn of $3 trillion and a negative savings rate.
Deutsche Bank economists say the Federal Reserve will create more inflation in 2024.
OK, that’s not exactly what they said. But that is the implication of their latest forecast.
This article concludes that the current downturn in bond yields is part of a continuing market manipulation by central banks in order to restore confidence in the global economic outlook.
There is a long history of government intervention in markets. In the nineteenth century, it was by legal regulation, the most notable of which was the 1844 Bank Charter Act, which had to be suspended in 1847, 1857, and 1866.
Inflation robs you of purchasing power by driving up the price of everything you buy. You see the impacts of inflation every time you go to the store. But sometimes inflation hits you in a more subtle way that’s difficult to see – through “shrinkflation.”
I experienced shrinkflation first-hand last weekend.
The technical position for gold is looking very positive for higher prices. But technical analysis should be backed by fundamentals.
To a large extent, fundamentals are in the eye of the beholder, whose opinions in any situation can vary from positive to negative and everything in between. But even for the economic optimists, there are gathering clouds on the horizon likely to continue undermining the global economic outlook, the dollar, and all financial asset values. Fiat currencies are being downgraded relative to real money, which is gold.
The Great Game of Geopolitics faces a new challenge. The new hotspot is Israel and the Muslim Middle East. Ukraine is all but over, and the US is likely to abandon her to her fate — like Afghanistan.
We shall have to see how both will play out. Meanwhile, energy prices are set to keep inflation and interest rates high, undermining governments, banking systems, and businesses dependent on cheap credit.
