Maximum Inflation Was a Fairytale Just Like Transitory Inflation

In Mar, everybody was talking about maximum inflation. Clearly, the CPI didn’t peak in March if it’s higher in May. And there is no reason to think these May numbers would be the peak either.

Pumpiing wasn’t transitory.

And inflation hasn’t peaked.

It’s actual more like peak inflation had been transitory.

The May Consumer Price Index (CPI) came in higher than anticipated. The headline year-on-year cost increase was 8. 6%. The projection was for the CPI to hold steady exact same level as last 30 days — 8. 3%. Rather, we got the biggest jump in prices during this inflationary cycle and the highest CPI print since 1981.

On a month-to-month schedule, the CPI rose by 1%. This was above the 0. 7% projection. An additional spike in fuel plus energy costs primarily drove the monthly increase. Energy costs rose 3. 9% during the month. Annualized, power prices are up 34. 6%. Fuel oil posted a 16. 9% month-to-month gain, pushing the 12-month surge to 106. 7%.

Stripping away more volatile food and power prices, core CPI went up 0. 6%. This equaled last month’s core CPI gain and was dual the March core read of 0. 3%, which was supposedly signaling peak inflation. If you annualize the last 8 weeks, the core CPI stomach in at 7. 2%.

Year-over-year, primary CPI rose  6%. It was slightly above the five. 9% estimate.

Most analysts focus on increasing energy prices as the primary driver behind persistent inflation, but prices rose in every 11 CPI categories. 9 of those 11 categories  charted price increases over the 12-month average .

Housing expenses continue to inch higher, actually using the government’s make-believe “ owner’s equivalent rent ” calculation. The particular housing index was up another 0. 6% around the month and this significantly understates the actual rise in housing expenses. It was the fasted one-month gain in shelter costs since 2004. The five. 5% 12-month gain rates as the biggest rise in housing prices since February 1991,

Americans are feeling the sting of inflation. According to calculations by Bloomberg Economics,   the inflation tax presently costs American households $433 per month . That concerns a $5, 200 annual increase in household costs.

Taking into account rising prices, the average consumer took the pay cut from Apr to May,   according to a separate BLS document . Average hourly earnings rose 0. 3%, but real wages fell 0. 6%. On a year-on-year time frame, real average hourly earnings decreased 3%, seasonally modified.

This undercuts the popular narrative that “ inflation isn’t really that bad” because wages increase too. Rising wages don’t keep up with rising prices. As a result,   American consumers are running up record levels of debt   and burning through savings to make ends meet.

And as bad as these numbers are, it’s actually worse than that. This CPI uses  the government formula that understates the actual rise in prices . Based on the  CPI formula used in the 1972s , CPI is over 17% — a in the past high number.

In March, everybody was speaking about peak inflation. Clearly, the particular CPI didn’t peak in March if it’s higher in-may. And there is no reason to consider these May numbers will be the peak either.

While the mainstream blames, Russia, COVID, supply chains, extreme demand, and perhaps voodoo just for rising inflation, it completely ignores the most significant factor –   actual pumpiing   created by the Federal Reserve.

Remember, rising prices are not in and of themselves “ inflation. ” Inflation is definitely an increase in the money supply. Increasing prices are a symptom of pumpiing. Loose central bank financial policy drives the money supply up.

The Federal Reserve has been water damage the economy with money — inflation — since 2009. We are drowning in inflation.

The Fed took  a weak swing at pumpiing   during the May meeting, raising interest rates by 1/2%. But with. 75%, interest rates remain historically low. Meanwhile, the central bank pushed back balance sheet reduction until June. And at the proposed pace, it would take over 7 years to decrease the balance sheet back to pre-pandemic levels. The Federal government Reserve hasn’t done almost enough to mop up all of the excess liquidity throughout the economy.

As a SchiffGold analyst put it, “ This is still highly stimulative, inflationary policy. Interest rates are being held artificially low. And we’re still dealing with all of this inflation that is in the pipeline. ”

Meanwhile,   President Biden’s inflation-fighting plan   essentially involves spending more money. That means more borrowing and more debt the Fed will ultimately need to monetize.

It should be clear to you that this won’t fix inflation. Actually it will only make it worse simply by raising the inflation tax. Every dollar the government spends comes out of Americans’ pockets — out of your pocket.

If the federal government will probably spend more to fight inflation, it will either have to increase taxes (and not just around the “ rich” — that won’t generate enough government revenue) or it will have to borrow more. That means the Federal government Reserve will have to print a lot more to monetize the debt. This means more inflation.

All of this tells me that top inflation was every bit the fairytale as transitory pumpiing.

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