The Hard Truth About Inflation

They’re Lying to You Were you forwarded this email? [Sign-up to The Daily Reckoning here.]( [Unsubscribe]( [Daily Reckoning] The Hard Truth About Inflation - Time to retire the word “transitory” when it comes to inflation… - The early stage of panic… - “The prospect for an actual depression is real”… Recommended Link [Regarding Your Available Report Download]( Hey, it’s Jim Rickards. With the holidays quickly approaching I wanted to do something special for my Strategic Intelligence readers. That’s why my team and I have been working around the clock on a special report detailing my #1 moneymaking opportunity for 2022. [Click Here To Download My New Report]( Somewhere in the Lower 48 States December 10, 2021 Editor’s note: Jerome Powell now concedes that inflation is proving more than “transitory.” Today Jeffrey Tucker shows you how inflation is already a serious problem and why it won’t improve anytime soon. [Jeffrey Tucker]Dear Reader, “I think the word ‘transitory’ has different meanings to different people,” Fed chairman Jerome Powell said the other day. “It’s probably a good time to retire that word.” There is stunning admission there, spoken about six months too late. It’s an admission that he has been terribly wrong. Economists too: This time last year, most were forecasting a 2% annualized rise in prices. Jerome Powell’s trick worked: He is getting reappointed to head the Fed! He is surely happy about that. He might not be that happy for that long. If people finally catch on to his role in generating once-in-a-lifetime American inflation, he could go down in disgrace, especially once people figure out the relationship between Fed policy and money printing. For his part, Biden is working to avoid the assignment of blame to the Fed and the Democrats. He is lashing out at oil companies and food producers, and it is only a matter of time before the whole of American business is in his crosshairs. As befits the office, everyone will be to blame except himself, his administration and the Federal Reserve itself. Early Stages of Panic The truth is starting to come out and we are already in the early stages of panic. The truth is that inflation is roaring at a pace not experienced in most people’s lifetimes. It’s already on par with 1979. Despite attempts by the business press to downplay it all, people in their lives are reeling from it. I went to mail a package a few days ago. The expense was three times what I expected. Then I took an Uber across town. It was a short trip, but it cost $30, which astonished me. Everywhere I turn I’m seeing huge and shocking price increases. And there’s the stuff I do not buy too. The price of shipping containers has doubled. Fertilizer too. And liquor, my goodness. It feels like we are being pillaged. The Consumer Price Index was released today. November CPI clocked in at a 6.8% annualized rate. But this number conceals the reality of what people are actually facing day to day on what they really buy. From what I can see, the inflation experienced on the ground is already in the double digits. Recommended Link [Unusual trading strategy discovered during the pandemic generated $53k in just over one year.]( [Read more here...]( Earlier this year a subscriber reached out to our team to tell us about a trading strategy he’d secretly been using to generate thousands of dollars in extra income on a $70k portfolio… Fortunately, I’ve convinced him to “come clean” and reveal his unusual method on camera. [Click Here To Watch]( The Fall of the Experts It’s amusing to remember how all this unfolded. The news of higher prices first hit in February of this year. Each time it came to a sector, there were excuses available. Look at car prices! Nah, that’s nothing: It’s only a chip shortage and that will come to an end. Look at lumber! Oh, brother, here we go again and it’s nothing really. Look at housing! That’s just because people are moving around. So on it went for the better part of a year. The inflation virus spread like Delta, and with each new sectoral invasion, the experts pooh-poohed it and said it was limited, temporary and due to special conditions that pertain only to that sector. How could they have been so wrong? Partly this is due to the illusory sense that there really is such a thing as an inflation index that rises and falls like the sea level. In reality, there is no such thing. It’s a statistical artifact. In real life, inflation hits unevenly, affecting sectors one at a time and in a scattered and bumpy way. Some things go up in price and then fall even as others then take over, rising and falling. Imagine yourself on a ship’s deck and water is sloshing from side to side. Sometimes it appears to go away only to come back even as it appears to go away elsewhere. If you keep your focus entirely on the behavior of water on the deck, you can miss the fact that the boat is sinking entirely. That is how inflation works. The experts have been trying to keep you focused on the deck and not looking at the hull. The Election In public, Fed officials have to pretend like they have this all under control. They will simply push a few buttons to tamp inflation down when the time comes, they say. This is all they can do. Don’t worry about it! Actually, the timing of all of this has Democrats in a panic. The Fed won’t act until the spring and only if things are not better or are getting worse. They will finally end their asset-buying campaign and might even start playing around with the interest rates they charge banks, which they suppose will then affect rates more broadly. 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This will not be a good look going into the November elections. What this might not do, for reasons we’ve explained, is tamp down inflation. Consumers and producers can easily counteract changes in money supply and interest rates by increasing demand for goods and services, thus reversing trends in money velocity. What that means is that we move into election season with depressed economic conditions, continued labor shortages plus inflation that is not only not going away but continuing to get worse. That will cause an electoral route of historical proportions. Poor Producers The prospect for an actual depression is real. Producers are right now facing astonishing increases in costs. They can bear these for a month or two or a quarter or two, but they are unsustainable over the long term. It’s barely made the news that the Producer Price Index is now clocking 44% price increases. The shape of the increase is nearly vertical. Keep in mind that all this data is backward-looking. There is a reason why you haven’t seen this chart in the business press. The mass media are trying desperately to keep people calm. They are basically conspiring with the Biden administration to pretend like this isn’t happening. It’s a futile exercise. Who are you going to believe, your own experiences or what they tell you should be your experiences? The credibility of the Fed and the entire class of economic and pandemic managers is shot to hell. At this point, two-thirds of Americans believe that the economy is being mismanaged. By this time next year, that will be four-fifths. Regards, Jeffrey Tucker for The Daily Reckoning Editor’s note: What do you think of cryptocurrencies? Do you think they’re all hype? Or do you think they’re the real deal? Or maybe you’re still up in the air? 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[Click here now]( for all the information you need to get started. --------------------------------------------------------------- Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Jeffrey Tucker]( is an independent editorial consultant who served as Editorial Director for the American Institute for Economic Research. He is the author of many thousands of articles in the scholarly and popular press and eight books in 5 languages, most recently Liberty or Lockdown. He speaks widely on topics of economics, technology, social philosophy, and culture. Add feedback@dailyreckoning.com to your address book: [Whitelist us]( Additional Articles & Commentary: [Daily Reckoning Website]( Join the conversation! Follow us on social media: [Facebook]( [LinkedIn]( [Twitter]( [RSS Feed]( [YouTube]( The Daily Reckoning is committed to protecting and respecting your privacy. 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