Ignore the goldilocks crowd, the inflationary tidal wave is only just getting started…
Ignore the goldilocks crowd, the inflationary tidal wave is only just getting started.
Everyone likes to talk about inflation, but very few people actually understand it. This goes for central bankers as well as the talking heads in the financial media.
Wait a minute… aren’t central bankers supposed to be EXPERTS on inflation?
Nope. And they’ve admitted as much publicly.
Janet Yellen, the former Fed Chair who now serves as Treasury Secretary to the Biden Administration admitted back in September 2017 that the Fed really has no idea how inflation works.
Speaking to the National Association for Business Economics in Cleveland on September 26th 2017, then Fed Chair Yellen stated the following whopper:
My colleagues and I may have misjudged the strength of the labor market, the degree to which longer-run inflation expectations are consistent with our inflation objective, or even the fundamental forces driving inflation.
This is central banker speak for “we really don’t know what we’re talking about when it comes to inflation and what causes it.”
Bear in mind… this was YEARS before the real inflationary tidal wave hit in 2021. Unfortunately, it appears the Fed hasn’t figured much out concerning inflation during that time.
To wit, in October of this year, after claiming that inflation was “transitory” for months and months, current Fed Chair Jerome Powell finally admitted that inflation is “well above target” and that “This is a different situation from what the new Fed framework is designed to address.”
At the end of the day, the current inflationary tidal wave is quite simple.
Regular Demand + Fewer Goods and Services =HOT INFLATION
Americans are returning to normal life as the economy reopens. And in some areas of the economy, demand is exploding higher as people have decided to stop putting off their dream purchases due to the “You Only Live Once (YOLO)” mentality the shutdowns helped foster.
This demand is not being met by supply.
Because shutting down the economy disrupted the supply chain and caused a major labor shortage. Having been paid to not work for the better part of 18 months, many Americans have decided not to go back to work… or to change careers from their previous work entirely.
This is happening in numerous sectors of the economy.
There are 8.6% fewer coal miners working today than there were BEFORE the pandemic. The oil industry is experiencing an even worse situation: only 1/3rd of the 100,000 employees let got by the industry in 2020 have returned to work.
Oil is a SYSTEMIC item for the economy. Oil or oil derivatives are present in lipstick, Vaseline, solar panels, polyester (stain resistant clothes), chewing gum, crayons, Aspirin, pantyhose, sneakers, detergent, CDs, concrete/cement, plastics of any kind, food additives, fertilizers, pesticides, candles, milk cartons, pen ink, and more.
So you can imagine the impact that fewer oil employees will have on things.
Dock workers aren’t returning to the workforce either. As I write this there are dozens of cargo ships sitting off the coast of the U.S. waiting to be unloaded. And many of those containers that are unloaded don’t go anywhere because the trucking industry is also experiencing a labor shortage.
Again, Regular Demand + Fewer Goods and Services =HOT INFLATION
And the craziest thing about this whole mess is that the same policymakers who created it, can’t do a thing to fix it.
The Fed, which has printed over $4 TRILLION to prop up the financial system can’t print new workers keen to return to work, keeping interest rates at zero doesn’t make oil prices come down, and spending hundreds of billions of dollars on QE per month doesn’t result in cargo ships being unloaded and life returning to normal.
Similarly, the DC crowd has no idea how to fix the mess they made.
The Department of Energy Secretary, the highest official for the energy industry in the U.S. doesn’t even know how many barrels of oil the U.S. consumes per day. The Secretary of Transportation is on paternity leave during the single greatest supply chain crisis in decades. The President thinks releasing 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) over several months will lower gas prices… when the U.S. consumes 22 million barrels of oil per day.
It would be hilarious if it wasn’t so tragic. And the reality is that it has unleashed an inflationary storm that is giving investors a ONCE IN A LIFETIME opportunity to get filthy rich from government incompetence.
During the last major bout of inflation in the 1970s, smart investors locked in gains in the QUADRUPLE digits (1,000% or higher). And THAT version of inflation was the kind the Fed could stop!
So you can imagine the profit potential of this crisis today.