Guest Post by Martin Armstrong
The Consumer Price Index soared 8.5% in March year-on-year, according to the report released by the Labor Department on Tuesday. Prices have not been this inflated since Reagan was in power in December 1981.
Former Fed Chair Ben Bernanke set the target level of inflation at 2% back in 2012. Once the Federal Reserve began pursuing a 2% level of inflation in 2012, that standard was soon set as the target for numerous central banks across the world. This all changed when the world collectively agreed to stop spinning for the coronavirus. As you can see, median inflation in the US was declining prior to 2020.
The 2% level remained in place for some time until they realized that inflation was not “transitory” and artificially low rates had diminished the central bank’s ability to control the situation. Guidelines and restrictions were lifted chaotically. The US government continued to spiral into debt by adopting new socialistic spending programs. Unemployment levels are just now recovering three years later, but the damage from COVID cannot be ignored. While wages are increasing, inflation has reached such an unsustainable level that everyone’s buying power has decreased.
By August of 2020, the Federal Reserve carefully changed its language:
“Notably, the Fed changed its language on inflation, replacing its 2 percent inflation target commitment, and instead said it will “[seek] to achieve inflation that averages 2 percent over time.”
Inflation made a notable uptick in April 2021 (4.2%) at a pace not seen since the Great Recession. By the end of Q4 2021, Chairman Powell admitted inflation was not “transitory,” and underplayed the situation that would unfold. We are now in the midst of a supply chain crisis, energy crisis, and wage-price spiral. Every variable of this situation contributes to inflation on top of a government that does not take measures to address any crisis.
White House Press Secretary Jen Psaki tried to do damage control a day before the report was released. “We expect March CPI headline inflation to be extraordinarily elevated due to Putin’s price hike,” Psaki said. The numbers do not lie. Inflation was on the rise well before Putin engaged with Ukraine. Government and central bank mismanagement have caused the current situation. Powell admitted they should have moved a bit quicker, but Biden remains wholly unaware of the problem and continues to worsen matters with his policies that are intended to destroy America before Build[ing] Back Better.
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Whether inflation is 8.5% or much higher, based on any fundamental economic rationale, the yield on a US 30 Year bond (~ 2.7%) is ridiculously low. That’s only possible because the dollar is still the world’s reserve currency. If that fails to remain so, rates would be expected to rocket upward, at which point the US would be incapable of servicing its debt.
How did you go bankrupt? Slowly, then suddenly.
Banking on being the least shitty major economy/currency doesn’t seem sustainable.
Are you seriously putting down a premise “yields on US 30 Year bonds can never be [directly] manipulated” as the foundation of your statement?
No, of course not. The question is whether they can be manipulated forever. That’s a clear “no”. So, for how long?
Until the dollar implodes in a hyperinflationary supernova.
After which yields won’t matter anymore; but they will still be able to “service” their debt… with entirely worthless, digitally created fiat.
Dates? I answered here.
It literally seems that people are completely devoid of any ability to see that all these COVID lockdowns are finally cascading into major disruptions of the production, supply and transport chains. Yes, if China shuts down, no more cheap crap is coming in, if oil goes through the roof because the U.S. cut Russia off from SWIFT, if fertilizer can’t be made because we stop producing new natural gas wells… this list goes on… then the price of every thing will go up. Now this, in and of itself, would be enough, but put trillions of dollars in the economy and a near zero rate just takes this to a whole new level. More money chasing few things just makes everything go up even further.
If I didn’t know any better, I would say this is by design. Well, of course, it is… what better way to lower the standard of living in the developed world and make the few, owners, and the rest of us, slaves. Any temporary respite will only be that… “temporary”… buy food insurance any chance you can.
Now Mexican truck drivers want in on the action. agradecemos a los camioneros canadienses por su inspiración
Seems the causes of “inflation” stem from many sources.
https://wng.org/sift/mexican-truckers-block-border-crossings-over-texas-inspections-1649848321
Texas Ag Commissioner at odds with Texas Governor Greg Abbott. What? Good ole boys at odds?
As the original NAFTA unfolded being the brainstorm of the Bush 41 administration then enacted by the Clinton administration , concerns among the American truck industry were safety requirements being lax on Mexican truckers, a legitimate concern and at the time something I mentioned frequently on politically deaf ears. Yikes, that’s a long time ago! From the looks of the Texas highways I travel with the number of blown out truck tires strewn seemingly everywhere, I question , old NAFTA, or the newest USMCA, does anyone really care about vehicular “safety” anyway? ($$$)
Further price inflation and product shortages in forecast
DUH !!!!!!!!!!!
US Treasury Secretary Janet Yellen says she thinks it will “be a long time, if ever, before the dollar is replaced as a key reserve currency in the global economy.”
File under famous last words…
Later that evening some swinging dick on CuNNt asked Janet what she meant by “a long time”, and she said “Oh, at least a year.”
If you don’t vote this UP you are a Swamper !!!
How else are they going to cover the HUNTER graft news?
if congress just gave themselves a 22% raise, then 17% sounds about right
Got a room full of Ramen noodles, I should be set
We all know who has caused the inflation. What I want to know is ??? What is Biden going to do to fix it?