Something Evil This Way Comes: Inflation
The January edition of our newsletter was among the first in the nation to raise an alarm about the potential for inflation caused by wild spending and quantitative easing by the Federal Reserve. Now, several trillions of dollars too late, others are pointing out triple-digit price increases in commodities, housing, energy, food, and recently, labor costs.
While the inflation fire was set in the previous administration, a gusher of gas has been poured on in recent months. While we thought in January that a 35% inflation rate might be a stretch, today the risks have increased to the point where 35% may be the best we can hope for.
We wrote then:
(This) leads to the question, Where is the inflation? The answer: As the Fed has been pumping out dollars, the American consumer has been socking them away rather than spending them. The consumer savings rate is the highest it’s been in modern history. There are different theories about why, but it’s a fact that trillions of dollars are currently off the market, markedly reducing inflationary pressure. At some future date, however, people’s confidence will return, dollars will come out of hiding, and inflation will roar into the headlines with a vengeance.
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