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All posts under ‘Inflation’

How Inflation Could Be Caused in 15 Minutes

So-called “money printing” is seen as a certain path to inflation. The Fed has printed almost $4 trillion since 2008. Yet inflation (at least as measured by official statistics) is barely noticeable. With so much money around, where’s the inflation? Increased money supply alone does not cause inflation. The money must be borrowed and spent.

Beating Inflation Could Get Even Harder

Financial repression basically means ensuring savers can’t beat inflation. When savers lose out, debtors win. And our government is one of the biggest debtors around. The classic tools of financial repression include encouraging positive inflation, holding interest rates down below that level & limiting the options for savers looking to maintain their standard of living.

Crashing Inflation Expectations Suggest Imminent Launch Of QE4

Summarizing it all: The last three times inflation expectations tumbled this low, the Fed was about to launch QE1, QE2, Operation Twist and QE3. And the Fed is now expected to hike rates in less than a month even as inflation expectations are the lowest since Lehman? The Fed is damned if it hikes rates & its credibility is damned if it launches QE4. Good luck.

Asset Price Inflation Enters Its Dangerous Late Phase

A progression of the asset price inflation disease into its final stage (general speculative bust and recession) would mean the end of monetary inflation and also inflation in goods and services markets. What could bring about this transition? Most plausibly it will be a splintering of rose-colored spectacles worn by investors. What could cause the splinter? Read here.

How Much Is Gold Really Worth?

Is gold reasonably priced? Too high? Too low? Who knows? But we wouldn’t worry about it. Either the price of gold is too high… or too low. How’s that for a helpful analysis? It depends on how you adjust for inflation, which is far from an exact science. But had gold prices kept up with UAW hourly wages, it would be priced at about $2,485 today.

I Sure Am Glad (To Just Hear) There's No Inflation

Cost of things: Consumer price index is up 38%, college costs are only up by about 100%, State & local government taxes are up 75% & urban-area rents are up 56% – all since 2000. Despite all these widely known examples of rampant inflation, every month we’re told – Inflation is near-zero. The Fed is terribly worried that this deflation will wipe out humanity without a healthy dose of inflation.

An Austrian take on Inflation

Success of monetary policy in achieving its inflation target will itself trigger a crisis. The dynamics of the situation suggest that as soon as the consensus view moves away from expectations of deflation, progression to the collapse of affected currencies could be rapid & the rise in the currency price of gold will be sudden & spectacular.

The Fed Waited Too Long: Here Comes Inflation

This inflation surge is going to be led by wage inflation. By the time the Fed realize that the labor market is so tight that employers are voluntarily raising wages across the board it is far too late, you are officially behind the curve as the surge in wage inflation is signaling loud and clear. The Fed will have no choice but to raise rates fast.

2% Inflation, Gold and The Fed's Current Mandate

Many modifications of policy mandates occurred between 1913 and 1971, and the Fed continues today in a desperate effort to prevent the total unwinding and collapse of a monetary system built on sand. A storm is brewing and when it hits, it will reveal the fragility of the entire world financial system.

Same Currency War, New Battle Phase

What is a currency war? They happen when there’s not enough growth in the world to go around for all the debt obligations. In other words, when growth is too low relative to debt burdens. They do this basically by cutting interest rates or intervening in markets. It is as an effort to cheapen the currency, get inflation & to display growth.

Central Banks Have Failed Because They Can't Push Wages Higher

Lowering interest rates to zero and issuing unlimited free money for financiers to generate asset bubbles has had a negative effect on wages and household income. This is not accidental or bad luck – Central bank money-printing cannot possibly have any positive impact on wages. “Bad” inflation is prices rising while wages stagnate.

Central Banks Create Deflation, Not Inflation

The Federal Reserve and other central banks desperately want inflation, even though it destroys the purchasing power of paychecks and savings, for one reason:in a system based on phantom collateral supporting ever-increasing mountains of debt, the Prime Directive of central banks is to make it ever easier to service yesterday’s debt.

Why You Should Be Prepared for Both Inflation and Deflation

Today’s investment climate is the most challenging one you have ever faced, because inflation and deflation are both possibilities in the near term. Most investors can prepare for one or the other, but preparing for both at the same time is far more difficult. What should you do? The answer is prepare for both, watch carefully and stay nimble.

Beware the Money Illusion Coming to Destroy Your Wealth

The money illusion is a tendency of individuals to confuse real and nominal prices. The impact of money illusion is not limited to wages and prices. Central bankers use money illusion to transfer wealth from you — a saver and investor — to debtors. They do this when the economy isn’t growing because there’s too much debt.

Governments Need Inflation, Economies Don't

The only thing that inflation can do is to help governments spend & remain viable. It’s a drug they can’t do without. Economies do just fine with low inflation. The idea that governments can hold inflation to just 2% per annum is preposterous. Once it breaches that level, governments will be powerless to contain it. Endgame will be hyperinflation.

Inflation's Not the Only Way Easy Money Destroys Wealth

One of the major negative factors that undermine the real wealth generation is loose monetary policy of the central bank, which boosts demand without the prior production of wealth. The longer the Fed’s loose policy stays in force the harder it is for wealth generators to generate real wealth & prevent the pool of real wealth from shrinking.

Doubling Down on Inflation

The benefits of inflation are supposed to be compounded by rising stock & real estate prices, creating a wealth effect for the owners of those assets which subsequently trickles down to the rest of the economy. In other words, seed the economy with money & inflation & watch it grow. But why has growth yet been a no show?

A Win-Win Scenario for Gold Investors

It is unclear if the world will tip into inflation or deflation, but one or the other is almost certain. The good news for gold investors is that gold goes up in either case as shown in the 1930s period of extreme deflation and extreme inflation in 1970s. Investors can meanwhile use setbacks to acquire gold at more attractive prices.

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