2019: Fragmented, Unevenly Distributed, Asymmetric, Opaque

inflationCharles Hugh Smith – Here are the key dynamics of 2019: fragmented, unevenly distributed, asymmetric, opaque. Want to know what’s happening with inflation, deflation, recession, populism, etc.?

It depends on what you own, when you own it, where you own it and its relative scarcity and stability–assuming you have trustworthy information on its scarcity and stability.

By ownership I mean all forms of capital: cash, tools, skills, social capital, trust in institutions, etc. Whatever forms of capital you own, the returns on that capital and its relative stability depend on the specifics of context and timing.

Will there be deflation or inflation? The right question is: Will there be deflation or inflation in my household?. In a rapidly fragmenting economy and society characterized by opacity, asymmetric information and unevenly distributed results, generalizations are intrinsically misleading / false. The only possible answers arise in a carefully limited context: my household, my neighborhood, my industry, my company, etc. Continue reading “2019: Fragmented, Unevenly Distributed, Asymmetric, Opaque”

Inflation Has Run Amok [Video]

Danielle DiMartino BoothGreg Hunter – Former Fed insider Danielle DiMartino Booth is sure the Fed is going to raise interest rates again at the September meeting. Why? DiMartino Booth explains, “I think he’s (Jerome Powell) the most independent Fed Chair in the past 30 years, and I think he’s going to raise rates regardless of what is happening in politics. . . . You don’t kowtow to political pressure when you need to do right by the economy. . . .

Powell thinks the inflation numbers are under-reported. He’s listening to companies saying their profit margins are being squeezed . . . non-labor costs are outpacing labor costs by the greatest extent in three years, and what that tells you is inflation has run amok. . . .

I think the Fed is going to continue to raise rates. . . . I think the markets have priced in the (September) rate hike by 90%. We may be looking forward to Jay Powell backing off come December. So, I am not really worried right now about a skyrocketing dollar.”

Continue reading “Inflation Has Run Amok [Video]”

Gold will sell for $10,000 per ounce or more!

goldGary Christenson –  Why should you care?

  • If you own gold or plan to buy gold, this information affects you. Other ideal times to buy gold were after the 9-11 disaster, during the stock market crash in October and November 2008, the December 2015 multi-year low in gold prices, and early 2017.
  • If you own silver or plan to buy silver, you should know silver prices will rally higher and faster than gold prices, and crash harder. Regardless, the potential upside for silver is tremendous.
  • Gold prices will not move upward in isolation. The forces that will propel gold prices far higher will push prices for basic necessities upward. We need clothing, transportation, food and energy. Expect those prices to increase, but owning gold and silver will help preserve your purchasing power as central banks further devalue the dollar.
  • If you live on savings or a pension, the upcoming inflationary environment will reduce the purchasing power of your savings, pension and social security.
  • Save your gold, and buy more for protection from the inevitable devaluation of fiat currencies and their loss of purchasing power.

Why will gold prices increase?

Continue reading “Gold will sell for $10,000 per ounce or more!”

Russian Roulette, Central Banks, and Gold

debtGary Christenson – Grab your ultra-reliable 357 magnum revolver and load the cylinder with six, not one, rounds of ammunition. Point the gun at your head if you are a member of the struggling middle-class. Imagine pulling the trigger and hoping …

Do you feel lucky?

The Six Loads of Ammunition for your 357 revolver are:

#1: Central banks and commercial banks exert a huge influence over all aspects of our financial lives. Paper currencies issued by central banks, digital currency units, credit card debt, pension funds, retirement accounts, checking accounts, Quantitative Easing, bond monetization, congress, regulators, Presidents, and the list goes on. Their game, their rules, your losses, and more of the same.

Continue reading “Russian Roulette, Central Banks, and Gold”

I Sure Am Glad There’s No Inflation

inflationCharles Hugh Smith – We are constantly bombarded with two messages about inflation:

1. Inflation is near-zero

2. This worries the Federal Reserve terribly, because stable prices are deflationary and deflation is (for reasons that are never explained) like the financial Black Plague that will wipe out humanity if it isn’t vanquished by a healthy dose of inflation (i.e. getting less for your money).

Those of us outside the inner circles of power are glad there’s no inflation, because we’d rather get more for our money (deflation) rather than less for our money (inflation). You know what I mean: the package that once held 16 ounces now only holds 13 ounces. A medication that once cost $79 now costs $79,000. (This is a much slighter exaggeration than you might imagine.)

Our excellent F-18 Super Hornet fighter aircraft cost us taxpayers $54 million a piece. Now the replacement fighter, the wallowing collection of defective parts flying in close proximity known as the F-35 costs $250 million each–unless you want an engine in it. That’ll cost you extra, partner.
Despite all these widely known examples of rampant inflation, every month we’re told there’s no inflation. Just to reassure myself there’s no inflation, I looked up a few charts on the St. Louis Fed’s FRED database.

I have to say, I’m scratching my head here because the cost of things has gone up a lot since 2000.

The consumer price index is up 38% from 2000. Now if somebody were to give me a choice between getting 10 gallons of gasoline and 10 gallons minus 3.8 gallons of gasoline, I’d take the 10 gallons. So how the heck can a 38% increase be near-zero inflation?

If I took $38 of every $100 you earned, would you reckon I’d taken next to nothing from you? Do you earn 38% more than you did in 2000? If so, congratulations; most people can’t answer “yes.”

inflation

Inflation in Urban Areas Up

Urban-area rents are up 56% from 2000. Now this is even worse inflation, because you just paid $156 for what used to cost you only $100.  Continue reading . . .

Charles Smith is a Guest Contributor for Shift Frequency – August 2015

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