The Phaserl


Is It Different This Time?

by Brian Pretti, Financial Sense:

One of the apparent conundrums of US Fed money printing in the current cycle is lack of headline inflation, at least as measured by the CPI. Certainly the CPI calculation itself is open to debate in terms of whether it is accurately depicting the cost of living in the US. But in bigger picture context, alongside quiescent headline CPI, the US credit markets have likewise not priced in meaningfully accelerating inflationary pressures. Although the very act of currency debasement academically connotes rising inflationary pressures, the US Fed has received a free pass in the current cycle so far as prior period predictions of a hyperinflationary fireball have fallen well short of the mark.

Meaningful to global economic and financial market outcomes ahead will be the Bank of Japan monetary extravaganza of a generation that lies directly in front of us. Will Japan be so lucky as to have little to no headline inflationary impact while printing historic amounts of money? Or could it be different this time relative to the US monetary and inflationary experience of the last four to five years? Although not given much recognition amongst the high fiving over recent Japanese equity market levitation, there is one critical difference between the backdrop against which the Fed has operated compared to the landscape the BOJ faces.

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1 comment to Is It Different This Time?

  • Ed_B

    The Fed and its friends in the BLS have concocted a serious propaganda campaign to “prove” that inflation in the US is low. Getting at the truth, however, is as simple as visiting economist John Williams web site, Williams uses the SAME calculation for inflation that the US Gov used prior to getting all cute with the numbers during the Clinton regime. Like the commies in Russia, Cuba, and other places they fudged the numbers so as to make their policies and, of course, themselves, look better. After all, if you are a politician, LOOKING good is just as good as BEING good, right? Sure it is! Those of us who live in the REAL world, however, do not have the luxury of lying to ourselves about our true situation. We NEED to know the truth because the quality of our lives depend on what we KNOW, not what we put on as a front for others. In any case, Williams’s calculations show that the US had 9.4% inflation in 2012 and not the 2.4% claimed by the Fed et al. That is a HUGE difference of about 4x higher than the official number show. At this point, we can either believe in the feel-goodism of the Fed and friends or we can believe a man of known integrity. I choose to believe John Williams because he does have integrity and he has no interest in merely looking good. That’s not why Fortune 500 companies pay him. They pay him to develop the most accurate info possible as regards inflation, unemployment, and numerous other subjects of economic interest. Finally, just ask yourself, what does your shopping sense tell you about inflation. Bought any food or fuel lately? If so, then you KNOW which number is the more accurate of the two.

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