The Roaring Inflation of the 2020s

Reflections From the Year 2030 [The Daily Reckoning] October 05, 2022 [WEBSITE]( | [UNSUBSCRIBE]( The Roaring Inflation of the 2020s - When will we finally see 2% inflation again?... - “Inflation is more likely to go to 20% than 2%”... - The roaring inflation of the 2020s: The view from 2030… [YOU MISSED OUT: 102% In 6 Days…]( Hate to say, “I told you so”… But we’ve sent you a countless number of emails trying to draw your attention to this unprecedented [wealth-building opportunity.]( And according to our file, you still didn’t take action. And that’s a shame. Because you just missed your shot at a 102% gain in 6 days – in the middle of a market selloff. That’s the bad news. The good news? We’re issuing a brand-new buy alert right now with money-doubling potential. [And you can go here now to get in position to receive it before you miss out again.]( [LEARN MORE]( Annapolis, Maryland October 5, 2022 [Brian Maher] BRIAN MAHER Dear Reader, The latest inflation rate runs to 8.3%, annualized. The Federal Reserve wishes to hound inflation down to 2%. Assume the Federal Reserve remains consecrated to its inflation-scotching… like a dog worrying a bone. When will the Federal Reserve finally attain its precious 2% inflation? How long will it take? Answer — the possible answer — soon. First a glance at this year’s scene of deflation, Wall Street. The stock market’s two-day efflorescence failed to extend today. The pressure in the gauges could not hold, though the drops were slight. The Dow Jones fell 47 points on the day, the S&P 500 fell seven, the Nasdaq fell 27. In all, a day of relative truce between bull and bear. The Historical Record Let us now revisit our question: When will the Federal Reserve finally attain its precious 2% inflation? What does history have to say about it? Bank of America’s crackerjacks scoured the 40-year annals, 1980–2020. They confined their search to the world’s “advanced” economies. In the high and spacious spirit of generosity, they packed the United States into this choice category. Omitted were the Argentinas, Zimbabwes and other economic botches that distort the data wildly. Once inflation scales 5% in the advanced economies — observed Bank of America — inflation does not slip to 2% for a handsome stretch of time. How much time? Ten years… on average. It may require more time. It may require less time. But 10 years is about par, concludes Bank of America: Once inflation is above 5% in advanced economies, it takes on average 10 years to drop to 2%. Here, in graphic form, is Bank of America’s evidence: [chart] Forget the Extremes It is true, the 29-year Greek inflation-taming slants the data. Subtract it away if you wish. You may even strike the southern European examples of Italy, Portugal and Spain — with their 17-year bouts. You nonetheless discover that muscling 5% inflation down to 2% inflation is often the work of years. The most rapid victory required three years — again, as it goes in the advanced economies, 1980–2020. In reminder… present United States inflation goes at 8.3% (in the official telling at least). And 8.3% is miles and miles from 2%. We hazard it will be years before inflation gutters down to 2%. How many years we do not pretend to know, yet the bout will severely try the Federal Reserve’s stamina… and resolve. [Strange 2022 Prophecy Rapidly Coming True]( [This Simple Chart]( America’s #1 Futurist George Gilder is telling American’s to “brace yourself” for the coming $16.8 trillion revolution. This same revolution could redefine millions of jobs and radically transform the way just about every major corporation does business. It could even change the way you get paid, save and invest for retirement. [And, says George, it could make you exceedingly rich — click here to see why.]( [LEARN MORE]( Forget About a Soft Landing The Federal Reserve is presently hard at the business of monetary tightening. Yet we believe it lacks the stamina and resolve to carry through. A deeply recessed economy and an equally recessed stock market will buckle its knees and sap its strength. And what about a “soft landing”? Nouriel Roubini — “Dr. Doom”: Since World War II, there has never been a case where the Fed achieved a soft landing with inflation above 5% (it is currently above 8%) and unemployment below 5% (it is currently 3.7%). Long before the Federal Reserve attains 2% inflation its corner man will pitch a white towel into center ring. It will not answer the bell. For that reason we believe 2% inflation is a distant prize — years distant. “Permabear” Peter Schiff is with us: A lot of people think the central bankers can put the genie back in the bottle by raising interest rates. They can’t do it without creating a financial crisis, without creating a depression. And so I think the central banks are about to throw in the towel on the inflation fight. I think inflation is going to win. We’re just getting started. Inflation is going to ravage some of these major economies for years and years to come… The world thinks the Fed is going to win this inflation fight. They’re not going to win… And now they claim they’re going to bring inflation back down to 2%. They don’t have a chance of doing that. Inflation is more likely to go to 20% than 2%. A New Inflationary Cycle? The View From 2030 We do not believe inflation will crest 20%. Yet we do believe inflation will be up and doing for some time, a menace of varying degrees. We may be mistaken of course. Perhaps the present inflation represents a mere temporary lurch in the charts, a transient burst, and the 40-year disinflationary trend will resume course. The beginnings and endings of cycles can only be identified long after the transition. Yet you must consider the possibility that a new inflationary cycle is indeed upon us — despite all the angels and saints. A certain Keith Wade is the senior economist with Schroders. Here he positions himself in the year 2030, where he offers us a tour of the distant horizon and the “roaring inflation of the 2020s”: Looking back, it was clear that the seeds of higher inflation were sown before the COVID pandemic ended. What started as a “transitory” rise in prices in 2021 turned into something far more persistent. With the benefit of a 2030 vantage point, it was clear that easy monetary and fiscal policy and a desire to avoid the mistakes of the past fuelled what is now known as the roaring inflation of the 2020s. How did it come to be? [Urgent: Currency Wars Alert]( “Worst case scenario is almost inevitable” -Former Pentagon Insider Jim Rickards [This Simple Chart]( In my 2011 book, I warned that the U.S. was engaged in a currency war. And that these wars: “Degenerate into sequential bouts of inflation, recession, retaliation and actual violence as the scramble for resources leads to invasion and war. ” Now with Putin invading Ukraine…Rising tensions with China… Inflation, recession, and supply chain issues all hitting the U.S. economy at the same time. It seems as if some of my worst fears have finally come true. [That’s why I’ve recorded an urgent video message.]( To update you on exactly what you need to be doing to protect yourself. Because if history is any indicator, this will not end well. [Click here to view my urgent video message.]( [LEARN MORE]( An Anatomy of Inflation The initial recovery from the pandemic in 2021 caused a surge in inflation as the world economy reopened… Inflation rose to its highest levels for more than a decade, but the expectation at central banks and of the majority of investors was that such a rise would prove to be temporary. In particular, commodity prices were expected to peak and unwind the powerful base effects which had pushed inflation higher… Although interest rates rose… monetary policy remained loose by past standards with real interest rates running well below zero [presently negative 5.1%]. More: Meanwhile, productivity gains had run their course whilst the threat of offshoring workers rang hollow as the world became increasingly regionalized. China saw an increasing outflow of foreign investment as firms onshored production back home in an increasingly hostile geopolitical environment. One of the great deflationary forces of earlier decades was weakened as the global labor market became fragmented. Let us not neglect energy: Additional pressure on prices came as the green agenda picked up pace. Following the surprising success of COP26, countries adopted taxes on carbon, raising duties on fossil fuels and pushing up energy bills. The rolling nature of these tax hikes created a continuous process of price increases, otherwise known as persistent inflation. Measures to force firms to decarbonize exacerbated shortages of oil as the majors cut capital spending on exploration and production and rebranded as renewable producers. The energy transition was inflationary as the world economy switched from burning cheap fossil fuels to the more expensive clean alternatives. The 1970s, Redux? Mr. Wade, in conclusion: The roaring 2020s ended in stagflation as capacity-constrained economies had little option but to absorb the excess demand created by loose fiscal and monetary policy in higher inflation. What had started as a transitory rise in inflation in 2021 had turned out to be more permanent. This was initially welcomed as strong activity combined with moderate inflation to deliver more equitable growth. But it soon turned out that structural shifts and a regime change in central banking led the world economy into one of the most inflationary decades since the 1970s. One of the most inflationary decades since the 1970s? Kind heaven, no. Yet given this decade’s inflationary onsets… this reflection from 2030 seems a just and reasonable history… Regards, [Brian Maher] Brian Maher Managing Editor, The Daily Reckoning Editor’s note: Gold prices absolutely exploded during the 1970s. They could experience something similar this decade. 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They’re also extremely helpful and will answer any questions you may have. [Go here now 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) [Brian Maher] [Brian Maher]( is the Daily Reckoning's Managing Editor. Before signing on to Agora Financial, he was an independent researcher and writer who covered economics, politics and international affairs. His work has appeared in the Asia Times and other news outlets around the world. He holds a Master's degree in Defense & Strategic Studies. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( The Daily Reckoning is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. 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