Inflation

[divs4ever]

maybe the RBA has fewer cronies to bail out

Russia already has moved rates to over 6% and they have ( hundreds of ) tonnes of gold to back the currency

 

[mullokintyre]

Terry Mcrann from Weekend Australian has a bit to say about US inflation.
He doesn't hold back.

Inflation is up, up and away in the US and the Fed – their version of our Reserve Bank – is in utter, desperate, utterly pathetic, and yet inevitably disastrous denial.
The greediest people on the planet who infest the lower part of Manhattan and try to cram into the other end of Long Island are caught between their ‘trust in the Fed greed’ and the increasingly undeniable inflation reality.

They ‘balanced that’, so to speak, with Wall St falling nervously but still only relatively marginally overnight Friday.

Inflation? Inflation? What inflation? That’s been the pathetically desperate response from the Fed as the ever-mounting evidence has rolled out from month to every month.

Oh, it’s only transitory: if we all go to sleep and wake up on New Year’s Day, it will all have disappeared, is essentially what Fed head Jerome Powell has been saying.

Well, whether transitory or not, not a single one of the vast number of experts at the Fed – the Federal Reserve – saw even this supposedly ‘transitory’ inflation as it was actually happening.

It wasn’t a case of getting predictions wrong, it was a case of not seeing what was actually happening to prices around them.

If ever there was a open-and-shut, absolutely undeniable, case for sacking a whole cohort of ‘experts’, this has been it.

Back in March, not a single one of the two dozen or so Federal Reserve Board members and Federal Reserve Bank presidents saw consumer inflation higher than 2.6 per cent over the course of 2021.
On the latest figures, it’s already added to 4.2 per cent in the seven months to July.


Just to make it very clear, that’s not 4.2 per cent over the 12 months to July, but 4.2 per cent in the seven months of this year to July.

That’s to say, in the first seven months of the year, inflation has run at a 7.1 per cent annual rate.

And just a few months before, the highest that any of those two dozen idiots – sorry, ‘experts’ - projected it to be would be for the entire year was 2.6 per cent.

Do you think, do you really think, they missed it?

Inflation would not only have to be zero for the rest of the year, but actually go negative to get even, actually, not close to that 2.6 percent.

The next monthly number comes out in two weeks, for August. Trust me. It will not be negative.

A pointer to what it – consumer inflation – might be came from the inflation figure that surfaced Friday in the US and which drove the nervous Wall St trading.

This was for producer prices. They were up 0.7 per cent for the month, making 8.3 per cent for the 12 months - which the agency releasing the data noted was “the largest advance (interesting word) since 12-month data were first calculated in November 2010”.

Now, all these ‘experts’ at the Fed did lift their inflation forecasts at the June meeting. To an average of 3.4 per cent. But the single highest forecast was still ‘only’ 3.9 per cent – already behind what inflation has added up to in the first seven months alone.
But still they persisted with: ah, but next year it will all go away. The single highest June forecast for inflation in 2022 was just 2.5 per cent.

I’ve detailed this at length because I want to get across to you the absolute stunning ineptitude of the people who are controlling your financial future.

As I wrote last week, Wall St is totally dependent on what the Fed does, and our market is totally dependent on what Wall St does.

Right now the Fed’s official interest rate should be at – to be gentle – 3 per cent; and heading higher, instead of the (disgraceful and inept) zero it’s been since 2010.

If it was at 3 per cent, the Dow would probably be at half the level it is now. Do your own calculation on what the Australian market would be; it would not be at 7300.

 

[divs4ever]

interesting ...

i don't often agree with Terry Mcrann

i do wonder if it is 'ineptitude' or sheer bluff because they are blinded like rabbits in the spotlight

 

[qldfrog]

interesting ...

i don't often agree with Terry Mcrann

i do wonder if it is 'ineptitude' or sheer bluff because they are blinded like rabbits in the spotlight

Inflation can only be countered via interest rate hike to be acceptable , but any hike will quickly bankrupt not only wall street but the US gov as the debt is now extraordinary massive.
And default would be catastrophic.
Not only for the USD but also Euro Yen all fiats.only gold backed currencies would survive intact: yuan and ruble which are backed by massive physical gold purchases in the last couple of years.
And maybe CAD AUD by association as gold producers.
It is a race against the clock for feds Wef to implement the Reset, all Covid pretexted population, media and financial controls before the bubble explodes..so for the time being,looking the other way...
I am long gold,silver and slightly cryptos.
We have to be wary of the next distraction which will be created after covid:hot war with China,Iran? Who knows..another nth version of covid or Marburg virus..or just discovery that alcoholic drinks are more dangerous than covid?

 

[divs4ever]

actually , inflation can be tamed by increased productivity and efficiency ( taking the pressure of rising costs , and increasing supply )

but that would take control away from Central Banks and those regulation-loving governments

by the way some claim the US defaulted when they closed the gold window many years back ( and several other nations have defaulted since )

and i think the global economy imploded in September 2019 ( repo madness )

watch out for greedy governments they have spent trillions of your future tax dollars

 

[Smurf1976]

Look back at the mainstream media over the past ~2 years and there's been countless stories and opinion pieces to the effect of "there is no inflation, nothing to worry about".

Closest thing you'll see to someone ringing an actual bell at the bottom of a market is when the mainstream media starts repeatedly saying there's no chance of it going up.

That said, I don't think the Fed's even slightly incompetent in this. Rather, there's been a conscious decision that inflation is the least bad way out of the mess and so that's what we're in for.

Governments and consumers could default on debt outright or the central banks could inflate away its true value. They'll choose the latter for sure.

At the consumer level it's hugely mixed. We have a situation where in the space of less than one generation things like housing have gone from something that practically everyone could afford to something that's out of reach of even middle income earners.

At the same time we have electronics and other equipment that a generation ago existed only in the professional realm but which is now so cheap that you could buy one as a consumer purely for novelty value despite having no actual use for it.

There's been a huge bifurcation in the consumer economy. Pretty much everything seems to have become either ridiculously cheap to the point of being disposable, or so expensive that it's considered an investment. There's not much left that's in the category of depreciating assets but affordable to the average person with some effort. It's all one way or the other.

 

[qldfrog]

actually , inflation can be tamed by increased productivity and efficiency ( taking the pressure of rising costs , and increasing supply )

but that would take control away from Central Banks and those regulation-loving governments

by the way some claim the US defaulted when they closed the gold window many years back ( and several other nations have defaulted since )

and i think the global economy imploded in September 2019 ( repo madness )

watch out for greedy governments they have spent trillions of your future tax dollars

Increasing productivity and efficiency is indeed one way out but at the exact opposite of the current narrative and Reset target.
You do not get productivity and efficiency with universal income and "they will own nothing but be happy"
So rate hikes is the only way to control inflation...but as discussed,it can not happen so inflation will run.
Get prepared..
Question is how?
If you mix narrative/Reset and high/hyper inflation, how do you stay safe?
Inflation is the stealth tax.increasing items like rates, company taxes and gst returns, and quickly moving people in the top tax bracket while delaying wage increases.but is a great way to pay back debt..
If you mix the new fascist control laws getting passed all over the western world with coming poverty wave, you see a few clear directions:
Cash disappears, eroded to death, your atm limit of $800 or 1k a week will not even pay for your shopping: we sometimes pay $200 for a big shopping already.
Gold going over the roof..and so more reason to seize it via decree, and actually sending the cops to get it as part of nation recovery effort..or war effort..who knows
An extra reason for Gov. to remove bitcoin and crypto new gold like status..make it illegal
Lastly, better own your home ..but soon made too expensive via land tax and punitive taxes.visit France for an early taste of where housing taxes can go.
So how do you protect yourself from inflation?
I own an ip: mostly paid off via offset account should i bring back that cash and lock interest for 2y, but then what do i do with that extra cash? Buy bullions would be a big bet?
Anyway interesting discussion

 

[mullokintyre]

There was a significant rise in treasury yields on Friday night, they at the highest yields they have been since March this year.
If the market thinks inflation is on the rise, it is irrelevant want the CB's and treasuries think, because the big players will have decided that inflation is here and they will react to it.
Despite the poor jobs report in the US on Friday, there is no big bets that the feds will cjange their tapering program that was forecast a frew months ago.
Time will tell whether the Fed reserve does a sneaky and put off the tapering program for a while.
If they do, it will further boost the share market and inflationary pressures.
Good luck contolling that.
Mick

 

[mullokintyre]

Once again, the experts got it wrong.
from Kitco

The key U.S. data point Friday is the monthly retail sales report for September, which came in at up 0.7% versus the consensus forecast of down 0.2% from August. The August report was also revised up, to a 0.9% gain from the original figure of up 0.7%.

One might read from this that consumers see inflation rising, so they buy now rather than buy later.

With oil , gas and even coal getting to giddying heights, how can anyone argue that we do not have inflation??
Mick

 

[over9k]

FWIW:

 

[Knobby22]

Alan Kohler showed a graph that show a large jump in consumption by the US population.
So its not just supply constraints but also increased spending!

I have my theories why increased consumption is occurring. Early inheritance, bit coin and share profits, excessive money in the system, scramble for assets (get out of cash).

The question is how transitionary is this?

 

[over9k]

Alan Kohler showed a graph that show a large jump in consumption by the US population.
So its not just supply constraints but also increased spending!

I have my theories why increased consumption is occurring. Early inheritance, bit coin and share profits, excessive money in the system, scramble for assets (get out of cash).

The question is how transitionary is this?

Nah, just the simple fact that goods are being bought but services are not. Computers, couches etc etc. People haven't been able to spend their spare cash on holidays or whatever so they're buying a new (whatever) instead.

A lot of sales for these things are going to fall off a cliff at some point as fact is that things like furniture are not the type of thing you upgrade periodically like a laptop or whatever. Once you've got a couch or a fridge or a car you usually keep it for quite some time.

 

[mullokintyre]

I had a few beers with one of my sons last night .
He is is in steel fabrication industry. Two of his mates were there, one a builder, the other an electrician.
All of them have the same problem, actually getting the raw materials to work with.
Supply train issues means that they no longer have one wholesaler, they basically have to ring around to find out who has got stock, then start talking about prices.
All of their input costs have gone up, including wages, as skilled tradesmen very quickly get poached.
I would imagine this scenario is being repeated across the country, I can't believe it is just isolated to this area.
Inflation is here, its having significant impacts, and it shows no inclination to go away soon.
Mick

 

[Knobby22]

I had a few beers with one of my sons last night .
He is is in steel fabrication industry. Two of his mates were there, one a builder, the other an electrician.
All of them have the same problem, actually getting the raw materials to work with.
Supply train issues means that they no longer have one wholesaler, they basically have to ring around to find out who has got stock, then start talking about prices.
All of their input costs have gone up, including wages, as skilled tradesmen very quickly get poached.
I would imagine this scenario is being repeated across the country, I can't believe it is just isolated to this area.
Inflation is here, its having significant impacts, and it shows no inclination to go away soon.
Mick

It's all supply issues though.
Once these are resolved I can't see inflation continuing.

 

[mullokintyre]

From Todays OZ

Chief executives have warned that consumers will continue to feel the pinch of rising prices with inflation remaining elevated as the economy battles supply bottlenecks as well as rising fuel and construction material costs.
The nation’s underlying inflation rate came in much higher than economists’ expectations in the year to September, causing the Aussie dollar to jump over expectations the Reserve Bank’s could bring forward rises in official interest rates.

Woolworths chief executive Brad Banducci said inflationary pressure had been creeping into supermarket shelves as more of his grocery suppliers were pushing for “material” price increases to recoup steeper shipping, freight and other supply chain costs.
Mr Banducci said he expected the grocery sector over the next six months to switch from a “very deflationary” atmosphere to “slightly inflationary”, evident in expected price rises across fresh food categories such as meat, as well packaged groceries and products like tinned food and pasta.

“The question is not whether we are going to be deflationary but to what extent there is material inflation in the market,” Mr Banducci said.

The Bureau of Statistics’ Consumer Price Index (CPI) released on Wednesday showed the trimmed mean inflation rate – which strips out more volatile price fluctuations – increased from 1.6 per cent to 2.1 per cent, its highest since 2015. Economists were forecasting only a 1.8 per cent rise in underlying inflation.

As has been a consistent theme for some time now, the economic forecasters got it wrong.
Everyone at the coalface, including all the citizens who are paying bills have seen inflation for a few months that is only getting stronger.
Tuesday is a defining day for the RBA and Phillip Lowe.
if he once again continues with the charade that there will be no rate hikes till 2024, he surely should be given the chop.
On September 14th, Lowe said he could not understand calls for rate hikes before 20124 (see AFR ).
For heavens sake, he might not agree with the conclusions drawn by others, but not understand why??
He seems to be mirroring the Fed reserve in his ostrich like pronouncements.
Mick

 

[qldfrog]

From Todays OZ

As has been a consistent theme for some time now, the economic forecasters got it wrong.
Everyone at the coalface, including all the citizens who are paying bills have seen inflation for a few months that is only getting stronger.
Tuesday is a defining day for the RBA and Phillip Lowe.
if he once again continues with the charade that there will be no rate hikes till 2024, he surely should be given the chop.
On September 14th, Lowe said he could not understand calls for rate hikes before 20124 (see AFR ).
For heavens sake, he might not agree with the conclusions drawn by others, but not understand why??
He seems to be mirroring the Fed reserve in his ostrich like pronouncements.
Mick

I am not exactly optimistic about australia but we have one advantage, while US and europe deficit are so big they can NOT increase rates as their own interests would collapse the countries, Australia can still afford...but will our RBA have the guts to do it, or just let inflation run and say: no my problem, look at the US..I think the latter

 

[mullokintyre]

I am not exactly optimistic about australia but we have one advantage, while US and europe deficit are so big they can NOT increase rates as their own interests would collapse the countries, Australia can still afford...but will our RBA have the guts to do it, or just let inflation run and say: no my problem, look at the US..I think the latter

NZ has already done it.
Raised rates for the first time in 7 years (see Reuters ).
Don't see why the inflationary conditions in NZ are that much different to here.
Mick

 

[qldfrog]

NZ has already done it.
Raised rates for the first time in 7 years (see Reuters ).
Don't see why the inflationary conditions in NZ are that much different to here.
Mick

No difference in facts, but difference in narrative, we are following more the bandwagon than NZ.
So whatever US do, we do...
And gov here does not need a strong dollar, the lower the better with our economy based on RE,coal and iron, anecdotally agriculture.
And inflation is good for gov.revenues are higher..than inflation ..due to tax bracket creep and automatic inflation adjustment for GST.
Inflation is a people punishing tool, some more than other but overall..you loose

 

[againsthegrain]

If rba doesn't act still a good chance the banks will make a move on their own, the media sure seem like they are trying to prepare the plebs for it

 

[qldfrog]

If rba doesn't act still a good chance the banks will make a move on their own, the media sure seem like they are trying to prepare the plebs for it

Banks will and cop the blame: clever move from Morrison ?