Why “Less Inflation” Is a Sneaky Trick

Why Less Inflation Is a Sneaky Trick
Photo by Martijn Baudoin

From Peter Reagan for Birch Gold Group

In case you haven’t noticed, President Biden’s economy has a persistent problem that isn’t going away.

That problem is the long period of wealth destroying inflation that hasn’t eased into disinflation (like it did after the 2008 financial crisis).

In fact, consumer price increases are still accelerating at a faster pace than any inflation rate (CPI) since December 2011. In addition to that, for nearly two consecutive years what some are calling “Bidenflation” ran hotter than 5%.

Since the turn of the century, we simply haven’t seen this level of sustained inflation. Take a look:

CPI inflation since 2000

Source with black line added to indicate today’s 3.1% CPI

Peter Morici wrote why he thinks the White House shouldn’t celebrate “easing inflation” just yet:

in January, the monthly change on an annualized basis was 4.2%, owing mostly to continued stubborn inflation in the services sector at 7.4%.

Those data indicate that the Federal Reserve should stay the course and avoid prematurely celebrating the end of inflation above 2%. The history of 100 episodes across 40 countries, as compiled by the International Monetary Fund, indicates that when central banks refrain from cutting interest rates too quickly, longer-term growth performance is better.

Taking everything above into account, you can plainly see that inflation isn’t going away in the near term.

That’s bad news for easy-money types, because that means the Fed might not cut rates anytime soon.

That possibility hasn’t stopped some forecasters from hallucinating, however.

Inflation so persistent it apparently drove mainstream media insane

In mid-2021, inflation was deemed “transitory” by the Fed. They let it heat up for over a year before, finally, deciding to do something about it.

They cranked rates up from 0.1% over the next 18 months to today’s 5.25%, where it’s sat for the last seven months.

Some banks collapsed. The media clamored for a Fed “pivot” back to easy money – but that didn’t happen, not quite. They did hand out several hundred billion in temporary loans.

Now, according to a CNBC article, some forecasters claim the U.S. economy will avoid a recession, and pull off a soft landing without slowing at all:

Forecasters in the CNBC Fed Survey are increasingly confident that the U.S. economy will avoid a recession and pull off a soft landing, and unlike past surveys, don’t even see growth slowing much below potential in the next couple of years.

The potential downside of the better forecast: less Fed easing with the possibility that officials at their meeting this week forecast fewer rate cuts in 2024 than they did in December.

It’s been strange to watch the mainstream media groupthink evolve over the last few years. To be fair, though, most of them really don’t understand what they’re talking about.

Even though the Fed entered the fight against inflation reluctantly, far too late, and blamed “supply chain snarls” rather than the trillions of newly-printed dollars for inflation – when they finally got into the fight, they’ve kept the courage of their convictions.

Maybe Chairman Powell really does understand that the only thing worse than a bank collapse is inflation.

So some tattered remnants of the dollar’s value remain…

Inflation has already cost you much more than you think

Since January 2021, your dollar’s buying power has plunged at least16%.

That’s shocking. But it’s also a feature of our Federal Reserve’s goal of steadily inflating the money supply.

Inflation is cumulative. Its destructive power compounds over time. And the farther back you look, the worse it is.

As “Dr. Insensitive_Jerk” invites us to consider:

Obviously, you should due your diligence with anonymous accounts like this, but the idea presented in these posts are interesting to say the least.

If you ignore everything else I’ve written today, remember this: The purchasing power lost to inflation doesn’t come back.

Which is a great reason to consider diversifying your savings with inflation-resistant assets…

Why does the Federal Reserve hate precious metals?

Here’s why:Physical precious metals like gold have historically provided an inflation-resistant store of value.

In other words, they’re immune to the Fed’s inflation mission. The Fed can’t inflate the gold or silver supply, and they can’t control gold or silver prices.

Their inflation resistance offers your savings a safe haven – the shelter of a real, tangible asset that whose value has withstood the test of time.

I think it’s safe to consider physical gold and silver as the only form of money the government can’t tamper with.

2024, Featured, federal reserve, inflation