From Birch Gold Group
Until recently, Federal Reserve Chair Powell has maintained that the Fed will operate using a “symmetric 2% inflation target.”
Simply put, that means the Fed sees 2% inflation as a level that sustains economic growth without putting too much upward pressure on prices.
But it looks as though that whole idea may be set aside, at least for now, with the potential for inflation to start rising, and quickly.
In the bar graph below, you can see that the “official” rate of U.S. inflation currently sits at 1.8% and has fluctuated at or below 2.0% since January:
But the inflation rate could rise dramatically over the next few months, because the Fed has recently proposed “launching a new rule that would let inflation run above its 2% target to make up for lost inflation,” according to ZeroHedge.
The Financial Times reported on this surprising development with a front page story by U.S. economics editor Brendan Greeley:
If the Fed adopts this so-called “make-up strategy”, it would mark the biggest shift in how it carries out its interest rate policy since it began to target 2 per cent inflation in 2012.
The Fed’s new symmetric inflation target would be 2.5-3.0% if the proposal passes, which could happen as soon as its next monetary policy review in the first half of 2020.
Which would also set the stage for things to get dicey…
According to Robert Wenzel, “It is very possible that once price inflation gets going it could jump to the 5% range very rapidly. That’s what happened in 1950, 1974, 1979 (up to 10%) and 2008.”
If inflation jumped to 5%, the Fed would be put into the position of raising the Federal funds rate even higher. Wenzel thinks it may need to go to “around 6.5% to 7.0% to kill the price inflation.”
Lending would get expensive. Food, energy, and even medical services could all shoot up in price. Not good if you’re Chairman Powell and want to give the impression that the Fed has control of U.S. monetary policy.
But the most alarming part of this is “real” inflation may already be over 5%.
The “Inflation Train” May Already Have Left the Station
The Consumer Price Index (CPI) is a set of methods that track the official inflation rate, monitored by the Bureau of Labor and Statistics (BLS).
It used to work to help businesses, individuals and the government adjust for the impact of inflation. That is, until politicians started messing with the methodology in the 1990s.
According to the methodology used before politicians made a mess of things, the inflation rate is shown by the blue line in the chart below:
As the chart shows, “real” inflation is just over 5%, as opposed to the officially reported rate of 1.8%. That’s well over twice as high.
If the Fed were to talk about the “real” inflation rate, it could cause panic in the markets. Not to mention, it would cause the public to seriously question the wisdom of “letting inflation run hot.”
The bottom line: If official inflation is allowed to “run hot” and exceed 10%, the U.S. economy would quickly be turned upside down.
Make Sure to Prepare for Rising Inflation Costs
Regardless of whether “real” inflation is correct or “official” inflation starts to soar, maybe the Fed doesn’t have as much control over effective monetary policy, as they would like us to believe.
If the Fed and other factors trigger the wrong events, serious inflation may happen again. When that happens, you’ll want to be prepared with assets that can protect your wealth.
So as inflation keeps rising at whatever rate officials want to report, it’s a good time to take advantage of the opportunity to diversify some of your portfolio into gold.
After 8 long years of ultra-loose monetary policy from the Federal Reserve, it’s no secret that inflation is primed to soar. If your IRA or 401(k) is exposed to this threat, it’s critical to act now! That’s why thousands of Americans are moving their retirement into a Gold IRA. Learn how you can too with a free info kit on gold from Birch Gold Group. It reveals the little-known IRS Tax Law to move your IRA or 401(k) into gold. Click here to get your free Info Kit on Gold.
It is my sincere desire to provide readers of this site with the best unbiased information available, and a forum where it can be discussed openly, as our Founders intended. But it is not easy nor inexpensive to do so, especially when those who wish to prevent us from making the truth known, attack us without mercy on all fronts on a daily basis. So each time you visit the site, I would ask that you consider the value that you receive and have received from The Burning Platform and the community of which you are a vital part. I can't do it all alone, and I need your help and support to keep it alive. Please consider contributing an amount commensurate to the value that you receive from this site and community, or even by becoming a sustaining supporter through periodic contributions. [Burning Platform LLC - PO Box 1520 Kulpsville, PA 19443] or Paypal
-----------------------------------------------------
To donate via Stripe, click here.
-----------------------------------------------------
Use promo code ILMF2, and save up to 66% on all MyPillow purchases. (The Burning Platform benefits when you use this promo code.)
All fiat currencies ultimately go to ZERO and the US dollar is over 95% of the way there. And all those wonderful assets – real estate, stocks, bonds, paintings -nominated in Monopoly money are in for one hell of a correction to true value – perhaps losing over 75% of their current inflated values when measured in real money such as gold. The times will be cruel for the thieving 1% in particular which will be their just reward but honest savers, pensioners and workers will also be hit very hard.
here’s a guy who is saying the same thing but not necessarily from the same perspective–
his 2nd article that is just below this one is also interesting–many profitable businesses are unable to access capital b/c of social investment policies of big investors–
https://adventuresincapitalism.com/
Think about what 2% means in the first place. It means that the criminal banking cartel that runs the Federal Reserve, is planning on STEALING 2% of all the wealth of the nation, every year, year after year, regardless of anything else going on. And that is just their starting point. No matter how much more productive you are, no matter how much you economize your manufacturing activities, no matter how much harder you work, you must ALWAYS work at least 2% harder, etc. simply to fund the THEFT of the banking cartel….and they are right out in the open about their theft and their plans, and everyone applauds their criminal efforts as if they are somehow GOOD for America. The herd of sheep is enormous.
We’re going to need lots of rope, great comment Mr Liberty.
Carry on….
Interesting how things change. When I studied economics many decades ago, a 2% inflation rate was considered dangerous.
Got GOLD?
I feel there is something called smart debt. Ultra low, long term fixed rates. I want to leverage and mortgage everything I have and back the debt with Pm’s. I can use the money today to buy a one ounce good coin for $1,500. If i have 100 ounces thats $150,000. If i buy a million dollar home/acreage/farm on mortgage, it costs me 200k upfront. If gold goes to just 10k my 100 ounces $150,000 will pay off the mortgage. Essentially my math is, i spent $150k on gold and $200k down payment. That left me $650k to do it all over again 2 more times. For the price of a million dollar home/farm i can get $3million hard assets paid in full when shtf instead of paying cash for $1m home/farm today.
Clinton in the 90’s used funny math to supposedly balance the budget and also changed the methodology of calc to BLM’s inflation amongst many other funny math. He set the precedent of allowing future govt officials to gerrymander the math. Obama was the worst as was Bush. Trump called this out as a candidate but magically fit right into doing the same to make him look good. As a candidate he bashed the fake mkt and fake govt numbers. Today he says he is great and so is everything else. I guess he decided to play by their rules and not awaken the masses like he promised.
Any shortage of goods and the constant increase in the money supply will push inflation way above 2%, in fact I would say it is at least 5 or 6% right now.
whitey,
smart consumers just substitute lower priced items so that keeps prices down–
you know,hamburger 4 steak,an abacus & a filing cabinet instead of a computer,etc.–
we have the inflation we deserve,just ask the govt–