The media has been playing a theme to protect “their boy” in charge plus “their team” in Washington, D.C. but reality has a nasty habit of reminding everyone that you can’t hide facts when people are suffering due the inflation tax.
Before any of you MMT morons or Marxist Democrat idiots start claiming that inflation is a political issue, please remember that many of us in 2008 through 2010 warned that eventually the Federal Reserve’s unethical actions would create a nightmare for the world down the road once the major banks no longer could absorb the excess reserves. Fast forward to the Plandemic, the 2020 trillion per month in printing and fiscal insanity then President Senile spending even more money on top of what was already in the system and here we are.
Thus all of these themes, talking points, and nonsense which follows can be dismissed as total bullmalarkey:
“Inflation is Transitory”
“Inflation is short term”
“The inflation rate does not reflect disinflationary forces”
“Inflation is peaking”
“The Fed can pause at 4.5% because Inflation will begin to roll over then”
and my favorite:
“The Fed can pivot when the recession starts in 2023 because inflation will start to move down towards 2%”
So after closing one’s ears to the BS from the Bubblevisions, it’s time to start looking at some hard data and the dangerous numbers which begin to indicate that this is now a systemic, not monetary problem which the Fed can not contain with tame actions or pauses without creating a 1970’s Arthur Burns result.
The effective Fed Funds rate is not even close to the official inflation rate of 8.2% from September per the BLS nor the sticky CPI from the Atlanta Fed:
Thus even if the Fed wanted to declare victory or achieve a true “neutral” rate, they still would have to increase rates by at least 4 to 5% over current levels.
The Atlanta Fed Sticky and Flexible CPI numbers also reflect a sad reality that inflation is still increasing:
Thus if one deducts that the more realistic Flexible CPI, which only decreased due to minor declines in food and energy, is used to find a true “neutral rate” then the Fed has a lot of work to do.
The long term implications of where both of the Atlanta Fed’s inflation tracking numbers will end up is sadly much, much higher. Despite all of the pro-regime happy talk about inflation peaking, a global diesel and heating oil shortage will result in much higher inflation rates in Q1 2023. Add in potential disruptions in the supply chain again and all bets are off as to when inflation, even the delusional PCE that the Fed uses, will ever start a long term decline.
Prepare for impact folks because markets are not priced for another decade of stagflation and the reality is America’s political system is not prepared either for a shock of this magnitude.