Posted on 05/28/2022 12:08:25 PM PDT by blam
Thx for the post. I can see so many possibilities. Time will tell.
As Lance explained recently on one of his daily shows (I never fully realized this), inflation is measured year over year as the delta from levels 12 months prior.
What that essentially means is once the “compare to” (baseline # from twelve months ago) is higher, inflation itself will be lower.
Earlier this year, we were comparing prices to much lower 12-month ago baseline #s than we are now. That’s because costs started to really creep up last Apr/May but were flatter in Feb-March. So, part of the reason the recent CPI # came “down” was that the 8.3 (vs 8.5 previous) calculation was from a higher April baseline than say, the Feb 21 - Feb 22 comparison.
As an example: if a gallon of gas is $5 today and $5 a year from now, that’d be a ZERO rate of inflation in the price of gas. However, if a year from now gas is $6/gal, you have 20% inflation in the price of gas. If gas goes down to $4, you have 20% disinflation in the price of gas.
Things do not necessarily “go back” to lower prices when inflation goes down. What inflation going down ACTUALLY means is that the rate of increase, year over year, is smaller.
For that reason, we are highly likely to have 8+% inflation in 23, because prices would have to go up ANOTHER 8% over the 8.3 - 8.5% they went up from 21-22 for that to happen.
Many economists are forecasting 4’ish% inflation by EOY 22. I believe Lance’s firm is a bit more pessimistic and forecasting 5.5 but don’t quote me on that.
Bottom line - gas, meat and a bunch of other stuff can stay just as expensive as it is now 12 months from now, and inflation could actually be back “down” to 2-3% or even lower. We would need DISinflation for prices to return to what they were before recent increases..
All that’s because inflation is the *rate of change* over prices 12 months earlier, not an indicator of how expensive things are or aren’t.
DECADES
We’ll go back to only eating meat once a week, maybe twice a week. We’ll pay 4 dollars a litre for gasoline not 5 dollars a gallon.
Typo - I meant to say we are highly UNLIKELY to have 8+% inflation in 23..because prices would have to increase ANOTHER 8+% over what they already are here in mid 22 for that to happen.
May 23 prices staying right around where they currently are would actually result in a 0-2%’ish inflation # at that time, as inflation is the rate of change, compared to prices 12 months prior - not a measure of how expensive things are or aren’t.
DECADES
Yep - the Fed pumped over $5 TRILLION into the economy in the form of “stimulus” and other “free stuff”.
That increase in $$ chasing too few goods (due to COVID related supply chain shutdowns) AND Biden’s “War on Oil” are 99+% of what drove the inflation we currently have.
And Biden is full of...for trying to scam people with the “Putin’s Price Hike” nonsense. I’ve been on the warpath educating people on that point, as it’s complete BS.
I think it may be premature to say peak inflation is behind us. Too many unknowns.
Friedman is a horse’s ass.
A scheme to deny SS cola payment for next year?
Let us not forget that Democrats will print money whenever they need it, and to buy votes. It will not stop.
Biden has in reased the US money supply 36% since taking office. Only a devaluation of the dollar can mask inflation. SPX is up 29%. NASDAQ up 19%. Gold us up 7%. Tesla is beating inflation and BTC as well.
With layoffs and wage deflation we are going to wish for the days we had only 5% inflation.
As long as the Bidenistas maintain their war on petroleum the price of fuel will continue to rise.
As long as fuel prices keep rising the price of everything transported by fuel powered trucks, trains, boats and planes will increase.
Try to think of anything in your home that was not transported that way.
When the prices of virtually every commodity on earth rises the dollar purchases less.
By any sane definition, that is inflation.
It’s also one of the most nonsensical articles I’ve seen in months.
Gasoline is at it’s highest point in history. Trucks are sitting empty. Shelves are empty in some places.
So the transportation costs are the highest in history. Shortages are present.
What happens to the price of something in short demand? What happens to
the price of something that has to be trucked in paying the highest shipping costs ever? What happens to our currency when it is printed faster than ever
with no end in sight?
My advice to the author is put down the airplane glue and push away from the table.
They are doing the great recession all over again. Housing bubble, wipe out the stock market, and destroy all our gains over the past 15 years.
Deflation is what happened last time after the crash.
PPI is higher than CPI, roughly 11% vs 8%. PPI is upstream from CPI. Producer prices cascade down to Consumer prices.
Along with flooding dollars into the market, we’re experiencing a shortage of commodities.
We will need to produce more before normalization. Worker productivity fell 7.5% in Q1 2022.
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