At a glance, the rising inflation appears to be the last thing on the mind of most Americans. Most are more worried about Islamic terrorists, Hillary’s criminal record, or Russia’s nuclear submarine patrols off our shores.
All the while, inflation is threatening to put a major dent in our standard of living. Indicators started showing up around the middle of 2015, culminating in gasoline futures testing down at $1.20 per gallon, weak crude oil and copper stocks and much more similar downward trends revealing a slump that’s not going to go away.
Economists Dismiss Inflation the Scare
A closer look shows that some big changes are in the wind. The core Consumer Price Index has been growing at a 1.9 percent yearly rate, and inflation measures are already in the Federal Reserve’s latest budget draft.
Bond market investors are beginning to make their bets with real money in hopes that inflation will stabilize and increase in spite of the recent fight over the weakness of commodity prices.
According to experts at Capital Economics, the 5-year / 5-year forward inflation exchange rate went up by nearly 15 basis points to a 2.2 percent rate between October and December of 2015- which flies in the face of expectations surrounding the 10 percent drop in oil prices around the same time.
Experts believe this reflects the expectation that a drop in energy prices hasn’t as much to do with U.S. growth as it has to do with a larger supply of oil. Expectations have been about the same in the Eurozone.
The Vice Chairman of the Federal Reserve, Stanley Fischer, noted that he believed the downward inflation pressure caused by a slip in energy prices should fade in the coming months and that comparisons for crude will grow fairer.
Other market analysts dismiss the predicted decline as being driven by passing factors. But they are making molehills out of volcanos.
What Market Big Wigs aren’t Telling You
Inflation is on course to run at 2.4 percent in 2016. Core inflation is also expected to rise about 2.4 percent. This is slightly higher than the 2.1 percent pace reported in 2015. Keep a look out for medical care to go up 3.6 percent in 2016. The cost of shelter can be expected to rise from 3.3 percent from 3.2.
To make a long, dry story short- the cost of living, in general, can be expected to go up a small amount in each category. Overall, the average working person can expect to pay between 1 and 3 percent more for goods and services of all kinds by 2017.
The reasons we’re given to explain this are really just a heap of distracting nit-pickery. But worse than that- the official story behind the coming inflation is somewhat uglier than plain short-sightedness. The fact is, these things are cyclical. Recessions can be triggered with some skill.
But the people at the very top of the financial food chain know something that we all should know, and don’t. That is, the mindset that booms and busts are created by unpredictable forces is deeply, dangerously flawed.
The peaks and troughs of the economy can be influenced by the actions of corporations and governments, but the overall landscape remains the same more or less.
Much in the same way that the weather does more or less the same thing each year- and when winter is coming we don’t act shocked and wonder what we should be doing. We anticipate it and prepare for it the same way we do each and every year.
So while media analysts and published professional opinions lead us to believe the coming inflation is an abnormality- CEOs and other captains of industry know very well that the time for another round of recession is here, and they have been preparing for it for some time now.
The automated cashier machines that are showing up in fast food restaurants are not a response to the new $15/hour wage laws. They have been in the works for years and were rolled out just in time to help the big conglomerates that own them to prepare for the winter of the dollar.
But the real reason that you don’t know what the big wigs know is simple- knowledge is power and power is relative. By crafting a culture where the average working person is ignorant of basic market science- they create a power differential which keeps them on top of the game.
As long as knowledge of the cyclical nature of the market remains the exclusive purview of the Big Banks and Corporate Globalists- the average citizen can do no better than an insect in a steakhouse.
Regards,
Ethan Warrick
Editor
Wealth Authority
