What Happens When the Chickens Come Home to Roost? by MN Gordon

Chickens coming home to roost is a colorful way to say actions have consequences, and the consequences when the everything bubble pops will be epochal. From MN Gordon at economicprism.com:

What happens when the chickens come home to roost?

This is today’s question.  But what is the answer?  In just a moment we’ll offer several thoughts and ruminations.  First, however, we must take stock of the chickens…

This week, for example, the chicken counters at the Bureau of Labor Statistics reported consumer prices, as measured by the consumer price index, increased in June at a year over year rate of 5.4 percent.  This marks the fastest pace of rising consumer prices since 2008.  And if you exclude food and energy, prices in June rose year over year by 4.5 percent…the fastest surge since November 1991.

In reality, consumer prices have increased much higher.  The ‘unofficial’ rate of consumer price inflation, as calculated using methodologies in place in 1980, is about 14 percent.  This rate of inflation is exceedingly caustic to retirees, savers, and wage earners.

Still, the Federal Reserve doesn’t think it’s a problem.  On Thursday, Federal Reserve Chair Jay Powell told the Senate Banking Committee he’s “not concerned” with rising cost of living.  He’s still asserting price inflation is transitory; that soon the price of used cars will abate and inflation will fall below the Fed’s 2 percent annual target.

We’ve all heard Powell’s fictions before.  If you recall, the Fed’s once ballyhooed normalization of 2018-19 was a great big sham.  Sure, $700 billion was contracted from the Fed’s Balance sheet between October 2017 and August 2019.  But that was in the wake of a $3.5 trillion expansion.  And it was quickly followed by another $4.3 trillion balance sheet expansion from September 2019 through the present.

What to make of it…

Layers of Dumbassery

Price inflation, like coronavirus or fentanyl, is a man-made scourge.  It’s a product of central bank directed money supply inflation.  And it’s made possible by debt based paper money.

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