“Make no mistake about it: I understand inflation is a real challenge to American families. Today’s inflation report confirms what Americans already know: Putin’s Price Hike is hitting America hard,” Biden said in a statement. “My administration is going to continue to do everything it can to lower prices for the American people.”
Which is of course absurd. Prices were already soaring and inflation was already at a 40-year high before Russia invaded Ukraine on the 24th of February, and there was never anything inscribed upon the fabric of reality which said the US needed to respond to that invasion with an economic war that has made everything worse. The US initiated these unprecedented acts of economic warfare in response to an invasion it could easily have prevented with a little diplomacy, and has managed to do so without even hurting the strength of the ruble at all.
Birch Gold Group asked me to talk a little bit about inflation today.
Now, if you’re like me, you don’t pay too much attention to the monthly CPI, Consumer Price Inflation reports the Bureau of Labor Statistics (BLS) publishes. They say inflation was +8.3% in April, down just a bit from the +8.5% reported in March. To be honest, that one number just doesn’t have much of an impact on my daily life.
For example, I haven’t really been following the crazy surges in used vehicle prices (in January, they were up 67%!) On the other hand, every time I put gas in my car, I notice the price per gallon. Nationwide, it’s about $4.40/gallon (unless you’re unfortunate enough to have a diesel, then it’s closer to $5.50).
I don’t pay much attention to those CPI reports because they don’t reflect my reality. I do, however, watch my personal expenses. And I hear from everyday Americans, folks just like you, who’re telling me their bills are up anywhere from 10-14% compared to a year ago.
How can that be? If CPI is +8.3% how can families have 10% higher expenses? Somebody’s not telling the truth.
I didn’t have to dig very deep to figure out what’s going on.
Housing prices rise 20%, but BLS shelter costs went up just 4%?
If you thought that the economic news was crazy during the first half of 2022, just wait until we get to the second half. So many of the problems that we are experiencing now are going to continue to intensify, and Americans are becoming more pessimistic about economic conditions with each passing day. In fact, as you will see below, a whopping 85 percent of us believe that it is “very likely” or “somewhat likely” that the economy will go through a recession at some point during the next year. Of course the truth is that if all we have to suffer through is a “recession”, we would be extremely fortunate. Our leaders have lost control of the economy, and many of us are extremely concerned about what is coming next. The following are 12 nightmarish economic trends that we should expect to see during the second half of 2022…
#1 Gas prices will continue to surge higher, and many Americans will be shocked by how high they eventually go. If you can believe it, in Washington State at least one gas station has now reprogrammed their gas pumps “to make room for double-digit pricing”…
At the 76 Gas Station in Auburn, Washington located at 1725 Auburn Way North, gas pumps have been reprogrammed to make room for double-digit pricing. In March, they still had single-digit programming.
A spokesperson at 76 confirmed to The Post Millennial that the gas pumps were reprogrammed to allocate for double-digit pricing. Although not confirming that they are expecting prices to increase up to $10.00 or more, the current trend suggests the possibility.
Chaos will reign as the future upends the past. Chaos doesn’t lend itself to prediction.
Stupidity, arrogance, and evil ultimately destroy themselves, but their rampage was unabated in 2021. A group of stupid, arrogant, and evil people are using a virus and its variants to shepherd the world into a scheme of totalitarian global governance. This was conspiracy theory when the virus first surfaced; now it’s nakedly obvious reality. The one redeeming feature of the year was that more people saw the light.
The self-impressed and self-anointed rule not by claim of divine right, but by claim of superior intelligence and virtue. Real intelligence and virtue hope to find the same in other people; our commissars prey on human weakness. Fear and panic are their allies, truth and rationality their enemies.
As word leaks out of Covid outbreaks on 100 percent vaccinated college campuses, sports teams, naval vessels, and cruise ships, and as fully vaccinated athletes drop incapacitated or dead in front of stadiums full of people and millions of TV viewers, the truth that can’t be hidden is grasped by anyone with a shred of intellectual integrity. The vaccines have failed their ostensible purpose, to protect against the virus and its variants. They have, however, admirably fulfilled their real purpose: a totalitarian grab for power and control.
The coming year will see attempts to institute the rest of the agenda: mandatory vaccination, implanted vaccine passport microchips, fully digitized money, a social credit system, and segregation or elimination for those who refuse to play along. The coming year will also see the inexorable progress of the Doom Loop described in “The Means Are The End.”
The vaccines and their perpetual boosters are an intentional attack on the human immune system. They will continue to produce their adverse effects, including impaired natural immune system functionality, which increases susceptibility not just to Covid and variants, but to many other maladies as well. Early indications are that the omicron variant is more likely to strike the vaccinated than the unvaccinated.
Biden’s ratings are in the toilet and the mainstream media is doing its best to put lipstick on the pig of his administration’s performance. Imagine where those ratings would be if the media was actually doing its job! From Peter Schiff at schiffgold.com:
The CPI surged another 0.8% month-on-month in November. The consensus expectation was for a 0.7% rise. The headline year-on-year increase was 6.8%. That was right in line with expectations. It was also the highest CPI print since 1982. And as Peter Schiff talked about on his podcast, the CPI number understates the inflation problem.
The November rise came on the heels of a sizzling hot 0.9% CPI in October. This was the biggest back-to-back CPI rise of the year.
Clearly, the gains we are seeing were not transitory if we’re at the end of the year and we’re seeing even bigger back-to-back increases in monthly consumer prices than at any point during the year.”
The total CPI gain for 2021 now stands at 7.1% with one month left to go.
January – 0.3%
February. – 0.4%
March – 0.6%
April – 0.8%
May – 0.6%
June – 0.9%
July. – 0.5%
September – 0.4%
October – 0.9%
November – 0.8%
Core inflation, excluding food and energy (as if consumers don’t have to eat or put gas in their car) rose 0.5%. The year-over-year core CPI was up 4.9%.
Peter said we need to remember that the Fed is still talking about inflation “slightly” above 2%.
We are miles above 2%. And there’s no way we’re going anywhere near 2% again.”
Peter brought up another important point. The inflation comparison between, 1982 and today is apples to oranges, and it is irrelevant.
The mainstream media and government officials like to compare today’s CPI numbers to the double-digit inflation of the 1970s.
“Temporary” is an inexact adjective, but the Fed has a different idea of temporary than most of the rest of us. From Wolf Richter at wolfstreet.com:
Inflation expectations are now totally unanchored.
Americans, as they struggle with the meaning of the Fed’s terms “transitory” and “temporary,” expect that inflation one year from now will rise to 5.7%, the 12th month in a row of relentless increases, the highest in the data going back to 2013, creating a beautiful record spike (red line), according to the New York Fed’s Survey of Consumer Expectations released today. And consumers expect inflation in three years to be at 4.2% (green line).
The Fed keeps saying in its FOMC statements that it wants “longer‑term inflation expectations” to remain “well anchored” at 2%. And they’re now totally unanchored and spiking to high heaven.
“Inflation expectations” is a key metric for the Fed, based on the theory that consumer price inflation is in part a psychological phenomenon – the inflationary mindset, as I call it.
Too much money, courtesy the Federal Reserve, chasing to little stuff, courtesy the massively overblown Covid reaction, produces rising prices, colloquially known as inflation. From Peter Schiff at schiffgold.com:
For the first time in nine months, the government CPI data came in under expectations. Prices rose by 0.3% last month, just below the 0.4% projection. Year on year, the CPI was up 5.3%. Core inflation, stripping out more volatile food and energy (for those of you who don’t eat or use energy) was up 0.1%. Core inflation is up 4% on the year.
In his podcast, Peter Schiff took a deeper dive into the numbers and explained why this doesn’t prove inflation is “transitory.” He also drilled down to the root cause of rising prices – too much money chasing not enough stuff. Given the current monetary policy, that doesn’t appear set to change anytime soon.
Focusing on the headline number of 0.3%, a lot of people were relieved because we finally got a cooler than expected inflation read. In the minds of many, it also validated the Federal Reserve’s narrative that inflation is “transitory.” But as Peter put it, “One month does not transitory make.”
First of all, 0.3% in one month, in-and-of-itself, is still a lot of pricing pressure. Because if you annualize 0.3, well, that’s almost 4% per year. So, if we got this ‘good number’ 12 months in a row, that’s a 4% gain in consumer prices, which is almost double what the Fed claims it wants, which is a rate slightly above 2%. Well, 4% isn’t slightly above 2%. It’s almost double 2%. So, this is not a great number in-and-of-itself.”
There are millions of Americans that are a lot smarter than the house-broken economists and media airheads who keep bloviating about “transitory” and “temporary” inflation. From Wolf Richter at wolfstreet.com:
And those who experienced the 1970s & 1980s inflation as adults expect 6.0% inflation a year from now.
The Fed keeps discussing consumer inflation expectations as one of the key metrics in assessing the path of inflation in the coming years. Inflation expectations suggest to what extent consumers might be willing to accept price increases, thereby enabling inflation. Consumer price inflation is thought to be in part a psychological phenomenon, similar to market prices. When the inflationary mindset takes over, consumers accept higher prices instead of going on buyers’ strike as they infamously did with new cars in 2008 through 2013, when demand collapsed and stayed down for years.
Consumers’ median inflation expectations for one year from now jumped to 5.2% in August (red line), the highest in the survey data going back to 2013, and the 10th monthly increase in a row, according to the New York Fed’s Survey of Consumer Expectations today. The survey also tracks consumers’ expectations of their earnings growth. And that combo became a hoot (more on that in a moment).
Inflation expectations for three years from now jumped to 4.0% (green line), the highest in the survey data. People are starting to blow off the Fed’s endless sermons about this inflation being “temporary” or “transitory.”
How long does transitory inflation have to last before it becomes non-transitory inflation? From Wolf Richter at wolfstreet.com:
“We need lower consumer demand to give supply chains time to catch up… recover efficiency… and break this vicious circle”: CEO of Maersk’s APM Terminals, one of the largest container port operators.
Today’s release of the Fed’s “Beige Book“ – an informal narrative of the economy as told by small and large companies in the 12 Federal Reserve districts – listed “shortage” 77 times, up from 19 times in January.
Shortages of nearly everything, with labor-related shortages being the most prominent. These shortages “restrained” growth, and companies were “unable to meet demand” because of these shortages. Here are some standouts:
“Extensive,” “widespread,” “intense,” “acute,” “persistent,” “broad,” and “ongoing” “labor shortages.”
“Shortages of drivers”
“Truck driver shortage”
“Ongoing microchip shortage”
“Pervasive resource shortages”
“Inventory shortages” from retailers to housing.
“Supply chain shortages”
“Shortages of parts”
“Shortages of inputs and labor”
“Increasingly severe shortage of auto inventories”
“Shortages of parts for farm equipment”
“Restaurants reported severe supply and staffing shortages”
“Raw material shortages”
“Shortages of labor and other raw materials” that delayed construction
“Persistent materials shortages”
“Shortages and higher costs for both labor and non-labor inputs”
“Retailers noted shortages of and increased lead times for merchandise, particularly on foreign-made goods”
The labor shortages came with “turnover,” and employees leaving their jobs to work somewhere else, which confirms the data in the report on job openings and quits in the most distorted labor market ever.
Economic growth bought with fake money is fake economic growth. From Peter Schiff at schiffgold.com:
Inflation continues to run rampant and it’s distorting the entire economy.
In a recent podcast, Peter Schiff explains how rising prices create the illusion of economic growth. And they are also allowing the US government to stealthily default on its massive debt. This is not a sign of a strong economy.
The media’s focus was on the 6.5% number, so-called “real” growth. That number is adjusted for inflation. Minus inflation, the nominal GDP gain was about 13%. Peter said the divergence between these two numbers really puts the inflation level into perspective.
The deflator used in the GDP calculation was about 6.4%. That means almost half of the nominal GDP growth was due to inflation and not actual economic growth.
Comparing the GDP deflator with CPI reveals that “real” growth may even be overstated. If you add up Q2 CPI and annualized it the same way they calculate GDP, you get 9.35%. So, if you use the CPI as a deflator, you get annualized GDP at a mere three-and-a-half percent.
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