Commodity Trade Mantra

Posts Tagged ‘Consumer Prices’

The Fed's Measure of Inflation is Furthest from American Reality

Ben Bernanke first set an official inflation target in January 2012, aiming at 2%. Has it been achieved? Well, it depends on how you measure inflation. There are many to choose from. The Fed has chosen the one that is most suppressed and furthest from the experience of most American households. So the Fed can pretend that inflation is “too low,” whatever that means.

Rising Inflation & Sagging Confidence in Central Banks will Catapult Gold Prices Higher

Inflation may surprise to the upside. Consumer prices are set to rise as oil rebounds, while low or negative interest rates and bond buying by central banks have failed to boost economies. Interest rate hikes are incredibly positive for gold prices, because of the existence of the huge QE “money ball” that sits at the Fed & other central banks. Gold prices need another rate hike from Janet to move higher.

Revealing the Real Rate of Inflation Would Crash the System

The grim reality is that real rate of inflation is 7+% per year, and this reality must be hidden behind bogus official calculations of inflation as this reality would collapse the entire status quo. Who’s being destroyed by 7+% real inflation? Everyone whose income has stagnated and everyone who depends on wages rather than assets to get by–in other words, the bottom 95%.

Inflation - The Fed's Nightmare Scenario Is Becoming Reality

Higher inflation is not a dream come true. It is the Fed’s worst possible nightmare. It will expose the error of their 8-year stimulus experiment & the Fed’s impotence in restoring health to an economy that it has turned into a walking zombie addicted to cheap money. If inflation catches fire now, with growth close to zero, the Fed will be completely incapable of controlling it.

What's The Real Reason The Fed Is Raising Rates? Surely Not Employment

Although Federal Reserve officials publicly claim that the reason for impending rate hikes is that the American economy is doing well, there’s not a lot of evidence, at least based upon prior tightening cycles, that it’s the real economy the Fed is worried about. Employment growth is in fact decelerating, and has been decelerating since February 2015.

Explosions in Debt, Stock Markets, Crude Oil, Silver & Consumer Prices

Exponentially increasing systems cannot last forever. Our problem is that the global financial system is based on exponentially increasing debt, energy usage, population & exploitation of natural resources. However, we are approaching the inevitable end of the exponential increases. Rallies & crashes have become more extreme.

Hurts So Good: When Exactly Are Falling Prices Bad?

Though a cause for celebration to the layman, economists argue that falling prices will harm business and lead to unemployment. Falling consumer prices are good for the consumer & the economy, but they are bad for central banks looking to maintain asset bubbles and for governments looking for a graceful way to renege on their debts.

Can Money Printing Cause Deflation?

Over the last 45 years I have observed that, in countries with high monetary inflation, real wages and incomes have tended to decline. Incidentally, this has also been the case since the turn of the millennium in the US, a period in which there has been a colossal expansion of money and credit.

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.

Silver Price At Historical Extremes

Silver is currently inexpensive compared to the S&P 500 Index, crude oil, the size and rate of increase of the national debt, and especially the future price for silver after markets have reset, paper assets have devalued, and hard assets have jumped much higher in price.

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?

QE: Quantitative Easing or Questionably Effective

If you were a member of the top 5 – 10% & had a large investment in the stock market, you have increased your nominal net worth, thanks to the levitating wonder of “printing money” via QE – Quantitative Easing. However, if you were in the bottom 90%, then the wonders of QE did not “trickle down” to you, except as higher prices.

Janet Yellen Is Wrong About Inflation

If consumer prices are rising faster than the authorities say, it means two important things: First, real GDP is not growing. Real GDP growth is adjusted for inflation. More inflation, less real growth. Second, the real cost of borrowing is much lower than we think. If inflation is higher, the real interest rate is lower.

Still Think the Fed Isn't Fueling Inflation? Check Out This Chart

One camp reckons the reason why inflation is muted is that the Fed largesse has flowed into asset bubbles rather than goods and services, and proponents of this view make a good point: since little of the Fed largesse has trickled down to the to bottom 99.5%, it can’t exerting much pressure on consumer prices.

Will The Fed's Massive Money Creation End In Inflation Or Depression?

The Fed’s massive money creation could go either way, which is potentially confusing. Till it stokes demand, it could lead to inflation. If it increases an already heavy debt burden, it could lead to recession, joblessness, and depression. Or it could lead first to the one and then to the other.

Stock Markets: Dow Hits New Record Amid Deepening World Slump

Throughout the world, stocks are surging. Dow Jones Industrial Average stock index, doubled since 2009, broke 16,000 for the first time Monday before falling back slightly to a new record close of 15,976 – Real economy in most of the world, yet remains mired in slump and mass unemployment.

"No Inflation" - A Common Global Lie while Prices Rise Simultaneously

The biggest lies in finance is this perpetual deception that inflation is good. Governments all over the world lie about inflation because it has such a huge impact in monetary policy – As long as inflation is low, central bankers can print money. So they have a big incentive to underreport it.

Deflation - Phobia Set to Bring on More Monetary Inflation

Why would Inflation below 2% pose risks to the economy? Who doesn’t want to pay less for things? It is only considered a problem because there is such a huge mountain of unsound debt in the system, much of it incurred by governments, which they naturally want to ease.

The Adverse Effects Of Monetary Stimulation

The problem for central banks is that the alternative to maintaining an increasing pace of monetary growth is to risk triggering a widespread debt crisis involving both over-indebted governments and also over-extended businesses and home-owners.

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