Despite an inflationary freight train, gold struggled to gain ground in 2021 as the markets fixated on the Federal Reserve and the possibility of tighter monetary policy to fight inflation. Will gold continue to fight headwinds in 2022 as the Fed launches its “inflation fight,” raises rates and possibly begins to shrink its balance sheet? Or could gold shine in 2022 despite the Fed’s feckless inflation fight?
Peter Schiff recently appeared on the Rob Schmidt Show on Newsmax to talk about the trajectory of the US economy. Peter explains how the Federal Reserve and the US government created a massive bubble, why it is going to ultimately pop, and how to protect your savings and investments when it does.
Elizabeth Warren and others are running around blaming inflation on greedy corporations’ “price gouging.” Of course, this narrative falls apart when you realize producer prices are rising faster than consumer prices. If anything, producers are letting consumers gouge them by not passing on all of their rising costs.
With 2021 now in the rear-view mirror, I believe that future financial historians may regard it as the year of peak speculation.
While the history of American markets is littered with periods of irrational exuberance, none of those episodes can really match the current market for outright delusion and the blatant disregard for basic investment discipline.
December gave us another big jump in consumer prices. But despite a lot of talk about an inflation war, accommodative monetary policy remains in play. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey breaks down the CPI data, Jerome Powell’s Senate testimony, and Joe Biden’s plan to fix rising meat prices. That story has a fun plot twist.
In the calendar year 2021, federal tax revenues surged by an incredible 25% compared to 2020 and were up 22.8% over 2019 (pre-COVID). But the surge in tax revenues was not enough to overcome a record $6.8 trillion in spending, breaking the spending record set in 2020 by 1.6%.
The CPI for December was 0.5% month over month, with a non-seasonally adjusted annual rate of 7.0%.
As the chart below shows, the December data reinforced a downward trend we’ve seen since a .95% reading in October. But is the recent omicron COVID spike hiding much higher inflation?
Despite a monthly record in receipts to the US Treasury, the federal government still managed to run a deficit in December. That’s because the federal government also broke a monthly spending record.
December Consumer Price Index data came out on Wednesday (Jan. 12). Month-on-month, it was again even hotter than expected. Peter called it an inflationary freight train that the Fed’s “field of dreams” monetary policy will not stop.
“Transitory” inflation has now been running hot for a full year.
Joe Biden keeps touting the “booming” economic recovery. And of course, he’s taking credit for it. But is the economy really booming?
If you look at GDP growth, it certainly appears the US economy is in the midst of a robust recovery. But economic growth is relative. And when your baseline is an economy that was shut down, any growth looks good. Of course, there is going to be growth from virtually zero.
But there is an even deeper problem with using GDP to gauge economic health. Like the government CPI formula, the GDP is calculated in a way that creates an illusion.