Another negative day with the Dow Jones down 282 points (-0.85%) and the Nasdaq down 105 points (-0.97%)
I found this to be a very interesting opinion on the subject matter from Paul Craig Roberts The Inflation Hoax
Yes, prices are rising, but not for the reasons the Federal Reserve says. When I say inflation is a hoax, I mean the purported cause is a hoax. The Fed is fighting a consumer inflation, a “demand-pull” inflation.But what we are experiencing is a supply-side inflation caused by the Covid lockdowns and economic sanctions that closed businesses, disrupted supply chains, and broke business relationships while reducing energy supplies to the UK and European countries, thus forcing up costs in a globalized economy.One of the many neglected problems of globalism is that inflations and recessions are no long simply a national problem. Interconnectedness sends adversity globally, although in varying degrees.
I couldn’t agree more as we’ve held the same point of view.
Meanwhile the Fed yesterday raised interest rates another half a percentage point in the face of expectations of a bad recession in the coming year. This is the high level of incompetence that today rules Americans.
Personally, I am suspicious of this inflation. If it is, as I believe, the result of supply disruptions, the resumption of productive activity following the disastrous lockdowns would itself have brought prices down without need of Fed action. I also suspect that the inflation resulted in part from announcements of its arrival, in which announcements executives and boards saw opportunity to boost profits and obtain their bonus rewards by raising prices. A lot goes on that passes unnoticed by economists and pundits.
Mr. Roberts is entirely correct.
I would just add that “Covid Stimulus” did have a large impact. Yes, its function was to replace lost income, but in most cases it did much more than that. I personally know quite a few people who made out like bandits with PPP, unemployment benefits, SBA loans, etc……
Meaning, today’s apparent inflation is once again rolling over into a deflationary spiral. Just as it should. And unless there is yet another disruption, something in line with the Covid Scam, we should expect this trend to accelerate going forward.
In other words and for the time being, I am calling the FED’s bluff.
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