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** 27-May-2021 World View: The Inflation Illusion

‘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

https://speculatorsanonymous.com/articl ... g-forward/

Re: Temporary spurts of inflation

The Ghost of Arthur Burns
https://www.project-syndicate.org/comme ... ch-2021-05

STEPHEN S. ROACH
The US Federal Reserve is insisting that recent increases in the price of food, construction materials, used cars, personal health products, gasoline, and appliances reflect transitory factors that will quickly fade with post-pandemic normalization. But what if they are a harbinger, not a "noisy" deviation?

BTW, thanks for the link, John.

More from Charles Hugh Smith on inflation:
https://www.oftwominds.com/blogjune21/i ... n6-21.html

** 05-Jun-2021 World View: Inflation and Scarcity

Tom Mazanec wrote: ↑

Sat Jun 05, 2021 9:07 am

> More from Charles Hugh Smith on inflation:
> https://www.oftwominds.com/blogjune21/i ... n6-21.html

That's a very interesting article, because it relates the current
spike in prices to scarcity rather than to the money supply, which
is the right way to look at it.

Unfortunately, he goes off into the weeds when he tries to do
a "historical" analysis, but his "history" only goes back to the
1960s. He might actually be credible if he had bothered to compare
the last couple of decades to the 1920s-30s, but if he had done
that, then he would have had to conclude that we're headed for a financial
crisis, and that would get him canceled by the cancel culture.

Of his graphs, the following FRED graph is the most interesting:

• Equities held by bottom 50%

America's generational Crisis era (Fourth Turning) began in 2003,
58 years of the Hiroshima bombing and the end of World War II.
So 2003 was a very important year for America.

The Boomer and Silent generations panicked over the possibility of a
new wave of nuclear weapons and other WMDs, so there was a ground
invasion of Iraq.

Generation-X came to power, after having spent the 1990s learning how
to become "financial engineers." They were so contemptuous of their
fathers' generation, that they then used those skills to create
trillions of dollars worth of fraudulent suprime mortgage backed
synthetic securities, and used them to defraud their fathers'
generation, resulting in the housing bubble, the 2008 financial
crisis, an millions of people losing their homes and becoming
bankrupt.

So the FRED graph above illustrates one consquence. The Gen-Xers were
contemptuous of their fathers, and were also contemptuous of their
fathers' investments, so they stopped buying from the stock market.
Instead, they defrauded their fathers, and screwed themselves and
everyone else.

Charles Hugh Smith's article would be a lot more credible if he had
explored that correlation. But, of course, then he would have been
canceled.

Thanks, John.
I will continue to post (in/de)flation data and articles on this topic.

More from David Haggith on inflation:
https://thegreatrecession.info/blog/inf ... -over-map/

Take in the nuance of what I have been trying to say as well, here by the erudite Rick Rule:

https://www.youtube.com/watch?v=zWcDTxaikbU

9:30-13:00 mark, roughly.

John I too wish you well. That’s why I did what I did. I just don’t think you are infallible any more...at least not in economics.
Maybe in geopolitics.

Tom Mazanec wrote: ↑

Tue Jun 08, 2021 8:28 am

John I too wish you well. That’s why I did what I did. I just don’t think you are infallible any more...at least not in economics.
Maybe in geopolitics.

Did you check out the Rule interview?

I tried to start at the beginning, but when he started talking about liquidity I tuned out.
My economics background is one entry level semester over four decades ago.
In a few minutes I am leaving on a vacation to Pittsburgh. See y'all Thursday or Friday.