The View From 1776

Resurgent Inflation

The Federal Reserve tells us that inflation is under control, but prices paid by businesses for raw materials and machinery are surging.

Posted by .(JavaScript must be enabled to view this email address) on 01/21 at 11:51 PM
  1. Thomas,

    This is a very strange argument (although one that you have used before). Isn't it strange that for the last five years you have been predicting imminent out of control inflation, (and falling skies) when, thank heavens, reality has been much kinder and gentler. Inflation rates for the past several years have been very modest.

    You claim that costs for raw materials have skyrocketed, yet magically at the same time, the costs of finished goods and services (from which those raw materials are fabricated) have remained nearly constant.

    Could it be that your analysis is flawed?
    Posted by .(JavaScript must be enabled to view this email address)  on  01/22  at  10:25 PM
  2. Government statistics, like the infamous LA crime lab, are "a cesspool of corruption." They jigger the numbers, exclude what they want, and revise them radically and constantly. The administration has flooded the country with fiat money, racked up the debt and deficits, and debased the currency. They have taken a massive gamble on inflation in the futile quest for economic growth. This has always led to inflation.

    It is a waste of time to debate the fluctuating and unreliable monthly data when the mega trend is so certain. For a nation to try to spend itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle!

    The obvious record of what comes from such folly is clear to everyone except the lunatic and radical Left--social planners, government engineers who can only find employment if they tout "top down" economic policy. All one has to do is ask "Who was Obama's mentor in youth, mentioned 22 times in Obama's autobiography? It was Frank Marshall Davis.... registered communist, journalist, activist for communism, educator, pornographer, poet. Go look it up. And then go look up who David Axelrod's mentor was or who Valerie Jarrett's father in law was (Vernon Jarrett). And this doesn't even mention Rev Wright or Ayers!! How can anyone take their claims seriously???

    As an investment advisor I can offer this advice: In the near future we will see a return to Jimmy Carter's world of 1981-3. Inflation and interest rates will have skyrocketed, and this time, servicing our national debt will be crippling. Public bankruptcies will spread. And there may be no Ronald Reagan to fix it all! Get ready for the day, coming soon, because it will make or break your financial well-being.
    Posted by bill greene  on  01/28  at  11:03 AM
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  6. It is a nice post. Thank you.
    Posted by  on  02/01  at  01:59 PM
  7. Bill,

    As an investor, I assume you are pleased that under the awful Obama administration the market just broke through the 14,000 mark for the first time.
    Posted by .(JavaScript must be enabled to view this email address)  on  02/01  at  11:31 PM
  8. Mr. Jay, I can't speak for Bill Greene, but my reaction is the opposite: the stock market is largely a bubble powered by the Fed's easy money policy. The Dow broke through 14000 primarily because fixed income investments have got so out of whack. The spreads between Treasuries and corporates, and especially junk bonds made the risk of investing in them no longer commensurate with the rate of income. Dodd - Frank has severely crimped the preferred stock returns by severely curtailing issuance by banks: lower supply, high demand = low yields.

    Because of the Fed's low interest-rate policy, municipal bonds have the same problem for investors. Issuers are calling bonds issued at rates of 5% to 6% and refunding them at much lower interest rates. Given the credit risks, which have increased under the impact of Obama's Long March toward socialism and his continued glacial recovery, the risks again begin to overbalance the rate of return.

    Within the last couple of weeks investment managers have begun to pile into the stock market as the least risky place for funds, a principal reason being that the Fed has promised to continue ignoring reality by artificially depressing interest rates for the long run. And it will be a very long run, because the current rate of job creation will necessitate many years of QE3 before employment drops below 6.5%.
    Posted by .(JavaScript must be enabled to view this email address)  on  02/02  at  04:29 PM
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