Friday, July 15, 2016

Fed Cornered: Core CPI Jumps Near 4 Year Highs As Rent Rises At Fastest Rate In 9 Years

As predicted, the Fed is cornered.  In a "Be careful what you wish for" scenario--the Fed has been desperately clamoring for higher inflation, as disinflation is mistakenly articulated as deflation, a softer term for depression, which is an existential threat to the financial authorities.  According to pundits, inflation equals GDP growth, which means the bureaucrats get to keep their jobs.

However, to the average consumer, higher prices equates to lower purchasing power.  Perhaps the computer industry best illustrates how lower prices--not higher prices, catalyze booming economies.  On the other hand, higher costs lead to lower profits, layoffs, and store closures.  See the big box retailers as counterexamples of booming economies.

Now that inflation is on the rise, the Fed now has to scramble because fighting inflation requires raising interest rates.  But due to exploding debt (at the government, consumer, and corporate levels), raising interest rates would bankrupt not just America, but globally, thereby crashing financial markets and destroying wealth.  This is the financial cul-de-sac which sound money advocates have been warning against.  Reckless creation of fiat currency and credit markets does result in tears.

Expect more financial crises and social unrest, as billions struggle to make ends meet.

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