I live in the real-world, with abundant inflation! BUT If like the FED you live with Alice in Wonderland you may never see inflation either!

 

This past week Uncle Joe Biden officially became US President with a “new deal” “bailout everyone” agenda which will exceed any prior stimulus actions needed to combat serious economic contagions in American history; to defeat the Covid-19 virus, promote economic growth and restore America. There is little doubt in many Keynesian flawed economic premise minds. Now that Biden can take advantage of the still ongoing crisis and reflate, they say with certainty (absurdity I say) that the US economy will recover and grow significantly. They state with confidence that investments will come flooding into America from around the world, driving the precious dollar [that has been deteriorating since March 2020], significantly higher against the currencies of nations that persist with austerity measures (in other words, every currency of every nation that refuses to reflate as much as the US will and has been, someone ought to tell the dollar bears as the dollar has been in a 9-month downtrend despite massive FED & government massive stimulus). Even now the International Monetary Fund “IMF” is encouraging all governments to spend like drunken sailors “as much as possible”.  The TBTF bankers and investment banking establishments undoubtedly believe in this premise, because of their massive Keynesian qualifications and their commercial banking interests. They believe universally that inflation is mundane at best and under the complete control of the manipulative FED due to their biased bogus “fuzzy-math computations” in the CPI growing at less than 2%, giving the FED ample room for monetary expansion within their so-called dual mandate. Once the reflation Tsunami wave of liquidity starts these likeminded numb nuts believe that industry can begin to reinvest (they squandered extremely large amounts of rainy day funds these past 12+/- years on massive stock buybacks, and now they want and are demanding bailouts?) again with confidence when the Covid-19 pandemic is finally over. And with the savings rate having been boosted during lockdowns (far less to spend discretionary money on, and/or stimulus checks and enhanced unemployment), they believe that there is a massive wave of pent-up consumer spending to be unleashed.

The resurrection of economic pipedreams as Keynesian economic investment strategists and managers see the FED gently rising interest rates while returning markets to normality in the future, as economic recovery morphs into some significant sustained growth while national finances will return to an equilibrium balance and then turn into a surplus when tax revenues fully recover (I laughed when I think of this crap) as it is the same “BS” crap Keynesian argument of the 1960s [trickle “tinkle” down theory they embellish] resuscitated and repackaged for the 2020s. How many times have we seen and heard this before over the past 55-60 years as every turn of the credit cycle, the Keynesian argument fails only to return as the establishment’s major beacon of hope and prayers.

Inflation is No-Where to be seen due to massive distortions, fuzzy-math and down outright lying! Our Government statisticians have taken full advantage of this concept as they hedonically adjust, modify, and tweak the numbers to show that inflation is under control, they do this to reduce the burden of inflation compensation wrote into our government’s COLA commitments and other liabilities! It is a cumulative process that commenced soon after governments agreed to compensate their citizens for rising prices in the wake of the inflationary 1970s; I lived through that wild economic period.

Ø  John Williams at Shadowstats.com “someone I subscribe to” has meticulously reverse-engineered the changes in statistical method deployed by the US Bureau of Labor Statistics since the early 1980s to arrive at a figure for price inflation without such changes. The difference from official CPI estimates is astonishing. And if we look at the Chapwood Index “I also subscribe to this site” which covers the prices “of the top 500 items on which Americans spend their after-tax dollars in the 50 largest cities” we see that annualized prices measured in this manner have risen recently by an astonishing rate “much as 13.4% and at the least by 7.1%” several multiples of the official “BS” CPI data we are asked to believe in. Major cities also have high rates:

o   New York 12.7%,

o   Los Angeles 13.1%

o   San Francisco 12.8%.

o   With an arithmetic average across all 50 cities at 10.1%, this is extremely different from the CPI’s all items rate for 2020 of a paltry 1.4% now is it not.

o   The Chapwood Index shows an average annual inflation rate of 9.97% over all cities between 2011 and 2020 a 9-year period.

It is immediately obvious at least to me that the government version of inflation is the outlier, with Chapwood and monetary expansion confirming each other. The implication is that the US economy did not grow at all in official inflation-adjusted terms. Instead, it contracted persistently after adjusting for both price inflation. The mirroring of Chapwood and M-3 broad money as deflators suggests that there has been little modification in the general level of liquidity in the hands of consumers, otherwise they would show real divergences.

It becomes obvious why monetary policy planners need to believe the “BS” CPI statistics. Having set a self-serving ridiculous policy target of full employment consistent with a 2.0% inflation target, it is clear that on realistic figures interest rates are significantly suppressed. The central-banker planner’s ridiculous (JMHO) solution has been for Keynesian investment strategists, fund managers, and even foreign investors to be enticed into believing (made to believe) that price inflation is in reality extremely subdued and is no threat (I believe they are dead-wrong). But they have been willing the tug-of-war as that illusion and the bogus premise has been remarkably successful as they all now subscribe to a “Alice in Wonderland” fairy-tale that runs parallel to the world in which they exist. They are extremely frightened to admit their stupidity.