Next stop on the disastrous American economic freight train is stagflation
“The crapification of the U.S. economy is now complete. The only thing left is the tiresome waiting for the implosion of the entire travesty of a mockery of a sham.”—Charles Hugh Smith
A new price inflation number came out on Thursday, and as expected, it’s not good – 7.5%. Of course, that’s with the rigged numbers for the government narrative. It’s well over 15%, according to Shadow Stats.
One of the nation’s top snack food CEOs, Dirk Van de Put of Mondelez International, said consumers are going to push back on higher prices. But, companies aren’t going to be able to not increase their prices.
Inflation is hitting everything. On the food side, cooking oil is reaching record prices and breakfast foods are soaring.
The National Milk Producers Federation said last month that the American “dairy situation continue to be tighter milk production, record export volumes, higher prices, sluggish domestic consumption, and dropping inventories.”
There are strong warnings that the energy crisis is going to get much worse with prices continuing to climb higher.
This, of course, is not just an American thing. Prices are rising around the world. A supermarket CEO in the United Kingdom is warning “the worst is still to come.”
The Fed is planning a slight tick-up in the interest rates at its March meeting, but that’s meaningless.
In fact, the Fed admitted this week that it’s not really planning on doing anything to fight price inflation. Meanwhile, the Fed and its propagandists at the Wall Street Journal think we have a booming economy that doesn’t need to worry about inflation because of record trade deficits. Afterall, Americans are unproductive but they love to spend which is the measure of a healthy economy according to these fools.
“That’s like your kid brings home an F on his report card and you’re like, ‘Oh, that must stand for fabulous,’” said economist Peter Schiff. “It doesn’t. It is failure. A 27% explosion in a (trade) deficit is an abysmal failure of an economy.”
By the way, what little is still produced in America doesn’t mean jobs for Americans as corporations used record numbers of robots last year.
The next step is stagflation which is defined as a sluggish economy with high inflation and unemployment rates.
“I think inflation is ultimately going to push the economy into a recession as consumers are forced to spend more and more of what they have on food and energy and insurance and just the basics,” Schiff said. “They’re not going to have discretionary spending. And when they have to cut back, that means a lot of other people lose their incomes, lose their jobs. This is going to be stagflation.”
Schiff notes this has been a long time coming as easy money from the Fed has been in place for decades. The inflation has led to higher stock prices as zombie corporations have been propped up by the funny money handed out by their bi-partisan friends in Washington which, Schiff said, “didn’t bother people because they thought inflation was making them rich.”
Of course, consumer items were also rising in costs over the decades, but the rigged inflation rate hid that.
We’re now paying for decades old mistakes that have never been corrected. The mistakes have gotten worse over the last two years with lockdowns and the Fed somehow getting even more out of control than it already was.
“We threw gasoline on the inflation fire because we pushed down supply while we were stimulating demand – the worst possible policy mistake,” Schiff said. “And I was criticizing it in real-time as the government and Fed were making it. And now, we’re paying the price for that with these big increases in consumer prices.”
Schiff added: “Unfortunately, we needed to be in a recession. Because, if people are not working and not producing, they have to reduce their consumption. We can’t just keep spending money as if we were still making stuff. So, if we’re going to stay at home, to try to deal with COVID, it meant that people had to spend less. But the government didn’t want that. The government wanted people staying home but continuing to spend money as if they still went to work. And that was the problem. And again, we’re paying for it now.”
The Fed is in a damned if they do, damned if they don’t scenario, as the Mises Institute detailed. It can’t simultaneously stimulate the economy and fight inflation.
If the Fed keeps the easy money policies in place, price inflation will continue to skyrocket. If the Fed actually does the right thing and substantially increases the interest rates, which must be above the price inflation rate to combat it, most American will be harmed because they won’t be able to pay back their massive debts.
Things will continue to get worse, so buckle up and prepare.
Content syndicated from TheLibertyLoft.com with permission.
