‘The Inflation Illusion’ – And Why I’m Betting On Deflation Going
Forward by: Adem Tumerkan
Last year – when the COVID-19 pandemic hit – both the Federal Reserve
and the U.S. government began aggressively easing. (Via borrowing and
printing trillions at a pace never seen before).
And – since then – the mainstream financial media’s constantly pushed
headlines about pro-longed inflation.
Well – a year later – and the inflation scare has only grown. ...
Don’t forget – both the mainstream financial media and global central
bankers have grossly underestimated how difficult it is to get
inflation going in the ‘age of surpluses’ (aka the globalization and
technology era) which began in the mid-1970’s.
And – just like previous cycles – I believe that they’re discounting
this fact again. . .
Thus – I believe that this is just a temporary spurt of inflation
(driven by supply-chain issues, base effects, and the economy
re-opening). And that the long-term deflationary trend is still more
likely to continue than not. ...
According to Guggenheim Investments – the sharp increase in the recent
core-CPI was largely due to just a handful of categories. All of which
were directly linked to the economy re-opening.
For instance: over-half the entire increase came from these four
categories – used car prices, vehicle rentals, hotel rates, and
airfare – which only make up ~5% of the core-CPI’s total index
weight.
- Small temporary factors boosted April CPI
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