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Inflation is Still a Volckerian Problem for the Fed

In the days of old, before the media propaganda went insane, a just and wise emperor of the Fed named Paul Volcker gave us stable money, sane policy, and reasonable price action.

If any of my readers believe that BS, I have a broken down British aircraft carrier to sell you.

That ship has more tows than my collegiate 1963 VW Beetle, but I digress.

This morning’s headlines from the mainstream media about the B(L)S report on consumer prices were a sight to behold:

So higher inflation is lower inflation and a hot reading is cooling. Good Lord, we have officially entered the Soviet Union Propaganda Twilight Zone.

There are already numerous articles about the hot inflation number this morning, including an outstanding review by Rick Santelli on CNBC this morning which should raise the alarm for anyone still not smoking the hopium.

The man is 100% correct, even after the benchmark revisions the non-seasonally adjusted numbers are a disaster.

For those still wanting to be worried even more, the Atlanta Federal Reserve Bank economists updated their CPI measurements and the “Sticky CPI” should set off alarm bells inside of Jay Powell’s printing department.

Exactly what I have been saying all along is still true. The facts are that the 20% sustained price increase since 2022 measured via the Bureau of Labor Statistics is not declining and in fact, prices are still increasing in many areas of the consumer economy by north of 5% year over year every month. This is not sustainable for long without the rate of inflation as measured via PCE(Federal Reserve Personal Consumption Expenditures) reversing it’s monthly declines and moving higher also.

While rental prices have begun a nationwide decline, the price of homes as measured regionally is still substantially higher in many of the high population states, pressuring rents in those areas to some degree. Add in the short term rental schemes that pressure local prices for newbie investors and potential new homeowners then an actual decline in home prices via any measurable basis probably will not be seen until later this year.

Energy and foodstuffs should begin to increase in the next three months which will add to the Fed’s dilemma and possibly force Jay Powell to hold the line. However it is this author’s belief, as previously stated in The Federal Reserve’s Nightmare, the Federal Reserve Bank is much more of a political animal versus the similar period of 1980.

Stay tuned as Jay Powell still has time to make this worse; or he begins incantations via prayer for deflation to the late Emperor Volckerius.

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