Posted on 05/19/2021 8:09:06 AM PDT by SeekAndFind
Consumer Price Index (CPI) data for April came in much hotter than expected. Year-on-year, inflation is up 4.2%. The big number even prompted Federal Reserve Vice Chairman Richard Clarida to say, “We were surprised by higher than expected inflation data.”
Peter Schiff appeared on Tucker Carlson’s show to talk about the consequences of more printed money chasing fewer goods. Peter said inflation is going to hit the middle class harder than the pandemic.
Peter said this hot CPI print is a cause for concern and ultimately it is a tax.
It is the inflation tax. And if you look at how much the cost of living went up, measured by the CPI in the first four months of this year, it’s 2%. So, if you triple that to annualized it, we have consumer prices rising at 6% annually. But if you look at the monthly numbers, every month it accelerates. So, if you extrapolate the trend of the first four months of this year for the entire year, you’re going to get a 20% increase in consumer prices in 2021.”
Tucker asked a poignant question. If the value of the US dollar is falling as quickly as the CPI suggests, why would any country want to invest in US bonds? Doesn’t this threaten to cause a shake-up?
Peter said they won’t want to invest. They’ll be selling US Treasuries.
Anybody that can connect these dots is going to be selling US Treasuries. And the problem is there’s a lot of US Treasuries to be sold.”
Peter noted that a lot of people are talking about a shortage of goods.
The real problem is the surplus of money. Whenever you print a lot of money, it’s always a goods shortage because the Federal Reserve can print all the money they want, but they don’t print products to buy with the money. So, we have all this money being printed. We’re not producing a lot. People are sitting at home cashing unemployment checks. This is a tax. It’s an inflation tax, a Biden tax, whatever you want to call it. But when Joe Biden says ‘don’t worry! Only people that make over $400,000 a year are going to have to pay higher taxes to fund all these programs,’ he’s lying. Because every American is going to pay the inflation tax. And it’s going to hit the middle class and the poor the hardest.”
That led Tucker to another poignant question. It’s clear that printing money means more dollars chasing fewer goods. Of course, we’re going to end up where we are today. So, why didn’t the geniuses making these policies anticipate this?
Peter said even the so-called geniuses at the Federal Reserve keep telling us not to worry. According to them, inflation is “transitory.”
But these are the same guys that told us not to worry about the subprime mortgage market. Remember early on, Ben Bernanke said, ‘ Don’t worry about subprime. It’s contained.’ Well, now they’re saying don’t worry about inflation. It’s transitory. Inflation is as transitory now as the subprime market was contained. And this inflation crisis is not only going to be worse than the financial crisis, it’s going to be worse than the pandemic. Because the government’s cure is what’s going to kill the economy, not the disease itself.”
I'm still waiting for the 2010 crash that he predicted and that I prepared for in 2009.(SOB!)
It's even worse. Inflation automatically leads to a "wage-price spiral." At 10% per annum inflation, the purchasing power of a dollar is cut IN HALF in only six years. So wages will have to double to maintain your earnings in real terms.
But tax brackets won't be adjusted for inflation (or will slowly adjust), so you will be pushed into a higher tax bracket. The people Biden says won't pay any new taxes will find inflation and the wage-price spiral has pushed them into the new brackets where you are heavily taxed.
The bastard is evil. He knows exactly how this inflation will hit the poor, the middle class, and how people will be shoved into higher tax brackets.
bookmark
If you need fixed-income investments, buy Treasury Inflation-Protected Securities (TIPS).
If you are retired, prepare to come out of retirement.
Well, people will only go into higher tax brackets, if they have higher taxable income.
Based on the 0bama years, I don’t expect there to be any discernible wage increases for years. The prices will all rise, and the entitlements will all rise. But for those in the middle class, paying taxes, they will just see a decreasing standard of living for the foreseeable future. JMHO
There’s the crisis that I foresaw. As the chinese virus slinks off to parts unknown, the dems need a new crisis. This one has been brewing since Puppet Man and Jezebel took office in the White House.
Expensive gas, food, housing, everything. But never fear! Your Government will swoop down from Heaven and solve the problem and save the human race! They will “solve” the problem they created by issuing more dollars, further diluting the value of the currency, and making everything more expensive. Then Puppet Man will announce special money that goes only to slaves, or anyone who has a dark skin shade and feels like a victim of slavery, paid for by additional taxes on productive citizens.
Buy gold!
Just saying this in case the article didn’t end with the obligatory Schiff exhortation.
So 2020 will be looked upon as the good old days?
Indeed, the prices always rise much faster than your wages, so you get really screwed. But the wages and salaries WILL go up. But prices always lead.
I've lived through all of this before. It isn't pretty. My father in law bought a bunch of 10-year Treasuries near the peak in 1980. He enjoyed that income for quite a while in retirement.
Here's some helpful investment advice...
I remember Idaho spud farmers drivin’ Caddys on their CD returns back in ‘80!
Maybe Disco will make a comeback too!
Re: https://www.investopedia.com/articles/investing/081315/9-top-assets-protection-against-inflation.asp
Investopedia suggests these investments to counter inflation:
1. TIPS
2. Leveraged Loans
3. Bloomberg Barclays Aggregate Bond Index
4. Real Estate Income
5. S&P 500
6. Real Estate Investment Trusts (REITs)
8. Commodities
7. 60/40 Stock/Bond Portfolio
9. Gold
Not at all. Wages and salaries have been hedged with outsourcing, increased immigration, female participation in the workforce, and automation/AI. That is part of the reason there is a legitimate tension/concerns in labor.
10. Live frugally under a budget.
“So what do rich FReepers counsel us to do?”
Buy our Crypto and save us!
If the cpi is going to be up to 6% rents tied to the cpi will increase, the over 65 Apts, mobile home parks have rent tied to cpi.
bmp
Then pick the right time to buy back into quality, high dividend stocks.
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