Inflation Is a Virus

Inflation is migratory and it can come sector by sector as fast as it can go [Gilder's Daily Prophecy] August 12, 2022 [WEBSITE]( | [UNSUBSCRIBE]( [SCIENTISTS SPEECHLESS] Patent No. 11,219,620 B2: The End Of Arthritis? This tiny stock’s new patent could give new hope to millions… and make early investors rich. [Click here to learn more]( And it all kicks off with an announcement that I expect any day now… when this $87 million company will announce what could be the potential end of arthritis. [>> Click Here Now.]( Inflation Is a Virus [Jeffery Tucker] JEFFREY TUCKER Dear Reader, Many younger people learned certain truths about viruses over the last two and a half years. They don’t hit an entire country at the same time in the same way. They take time to populate. They hop from region to region. It seems to get better and then it gets worse. They impact different people in different ways. Tricks deployed to outsmart them fail. They have to become endemic in the population one way or another. All of this is true of inflation too. It is unleashed as a lab creation in the bowels of the Federal Reserve. Once out there, it is going to do its damage. There is a lag. There is spread but it's always uneven. It moves from sector to sector, seeming to get better and then only getting worse. It migrates in unpredictable ways, but the damage ends up as universal in the end. It has to become endemic. The Rampage of Loose Money We’ve seen how this has worked. It hit stocks and crypto and backed off. It hit homes and then backed off. It hit energy and backed off. It laid off electricity prices for a long time and then that sector too got a jolt. It’s a disorienting feeling because one never knows what the next target will be. Here is what we are dealing with. Starting in the spring of 2020 and extending to this year, the Fed unleashed $6.3 trillion freshly printed dollars. The purpose was not to bail out the financial systems as it was in 2008, when the money only ended up in cold storage in the Fed’s safe. This time the new money was sent out straight into the bank accounts of people and businesses. It would take a complete fool not to know for sure that this would affect prices. How long before this inflation becomes endemic? Let’s think about this by looking at the data. The blue line is the raw money supply while the red line is consumer prices as calculated by the Bureau of Labor Statistics. They tend to run along together barring some exceptional circumstances. Right now, the blue line is way ahead while the red line is just catching up. [chart] Based on this chart, if the relationship stays consistent, we would be wise to expect far more inflationary effects in the future. In addition, we’ve seen three successive quarters of upward moves in M2 money velocity. This means a fast circulation of money, which further drives inflation (MV=PQ). [chart] Biden Drops BOMBSHELL On U.S. Dollar [Click here to learn more]( Joe Biden just dropped a BOMBSHELL that could send shockwaves through the U.S. economy… And deliver a DEATH BLOW to every dollar in your bank account. Thankfully, we have a “man on the inside” who’s been following this development very closely… And in [his latest MUST-SEE presentation]( he reveals exactly what Biden just did… Why every dollar you own could be in serious jeopardy… And how to protect yourself from the potential fallout. [Click here now to learn every important detail before it’s too late](. Not Zero When the CPI came out this week, I knew that the Biden administration would try to claim it was not as bad as it seems. I had not expected that they would go full Orwell and claim that inflation was zero. They actually did a crude annualization of a one month aggregate number. Within that number, electricity prices were already rising 1.2% or 15.4% year over year. And yet, here was Biden claiming that inflation was over. The PPI came out the next day and did in fact show some lessening of the inflation pressure in some areas even outside of energy, though some sectors like international shipping rose 33% in one month. So it’s not good news but it does provide some justification for the sense that things are not getting as bad as fast as they were two months ago. At the same time, stock markets went nuts making up for lost time. The Nasdaq entered bull market territory. Crypto responded too, as we might expect, now that we know for certain that its market moves over the last several years have tracked regular financials wave for wave. Prices Are Prices Why might financials have rebounded? The Biden administration line that inflation is over gives the Fed cover to call off its war on inflation as we approach midterm elections. They can cut it out with this rate-increase stuff or at least stop the aggression. That means going back to an inflationary boom to forestall a worsening recession. Wall Street loves hot money. Even if no one actually believes that inflation is over, everyone is ready to buy based on the perception that the Fed will call off the attack. Here’s another theory, and stay with me here. New money pays no attention to the categorization of sectors used by economists. The CPI clocks only consumer prices. It does not consider the buying of financial as consumer products. They are considered investments. It’s all a bit arbitrary in a way. You can consider your dishwasher an “investment” too, as myriad ads will tell you. What is consumption and what is investment really does come down to an intuition-based naming scheme. As a result, some goods can go up wildly in price and never be calculated by the CPI. In this case, let’s just call them “stocks.” Yes, I’m suggesting here that the financial market might in fact become the new lily pad for the toad called inflation. It could migrate away from energy, housing, and food and land in stocks and crypto. This could be what is happening right now. Investors will want to know how long this is going to go on. It’s pure guesswork. Could it be a few months, even to carry us to midterms? The Democrats would like to hope so because otherwise they are facing certain death at the polls. Just as a virus doesn’t care about models, inflation doesn’t care about what we call the CPI. The new money is going to find a home. Based on the data we see, there will be no quick end to the price pressure. Nor will there be going back to the old days of what for 40 years we considered to be normal prices. That the 2019 dollar is now worth $0.85 is already a done deal. Some Inflation People Love! Isn’t it fascinating how people hate high gas prices and high egg prices but adore high stock prices? It’s odd because they can all have the same cause, not higher valuations but a mere devaluation of the money. We like inflation in assets we own and despise it in consumption goods we have to buy. It’s human nature however inconsistent. Does it mean it’s a good time for financials? I would never dare to predict that but maybe it is. What comes next? As we’ve said, inflation is migratory and it can come sector by sector as fast as it can go. Regards, [Jeffrey Tucker] Jeffrey Tucker These weird devices are about to appear all over America [Click here to learn more]( According to America’s top tech futurist – dubbed the “Tech Prophet” by Forbes – millions of these strange little devices are about to appear in every corner of our country… including your home. What are they? And why did one tech insider with connections to Apple and Microsoft claim they’ll “rewrite the rules of what’s possible?” [Find out more right here.]( [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( Gilder's Daily Prophecy 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. To end your Gilder's Daily Prophecy e-mail subscription and associated external offers sent from Gilder's Daily Prophecy, feel free to [click here.]( Please read our [Privacy Statement](. For any further comments or concerns please [contact us.]( If you are having trouble receiving your Gilder's Daily Prophecy subscription, you can ensure its arrival in your mailbox [by whitelisting Gilder's Daily Prophecy.]( © 2022 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We expressly forbid our writers from having a financial interest in any security they personally recommend to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.