Post by Admin on Jul 24, 2021 17:16:16 GMT -6
Originally posted to r/wallstreetsilver July 13, 2021 - moved here July 24, 2021
The powers that be would have you believe that inflation is transitory.
Originally it was due to base effects present from April to July of 2020. The low levels of the CPI then are artificially pumping up the YoY values seen currently. This idea is losing steam quickly, but has still been thrown around on occasion. Next it is that certain items like used cars are skewing the values. This may be correct, but as prices stay high, even if used cars normalize, other items will move up to take their place.
Very few are even discussing the bogus number being used for housing right now which shows next to no price increases for shelter even though we are in a seller's bubble on real estate.
All is laughable, given the hypocrisy that is the CPI in the first place, let's still use some of their own values against them and try to get rid of these base effects that are being held up as part of the reason for what we are seeing.
Looking at a chart of YoY inflation, it can easily be seen that there is a dip from April to July 2020 before the CPI flattens from July 2020 to January 2021 at around 1.5%. Let's look at some shorter term annualized CPI values for 2021 though and see if trends develop.
Monthly CPI Annualized - Jan 3.6%, Feb 4.8%, Mar 7.2%, Apr 9.6%, May 7.2%, Jun 10.8%.
Quarterly CPI Annualized - Jan 2.8%, Feb 3.6%, Mar 5.2%, Apr 6.8%, May 8.0%, Jun 9.2%.
Bi-Annual CPI Annualized - Jan 2.6%, Feb 2.8%, Mar 3.6%, Apr 5.0%, May 5.8%, Jun 7.2%.
YoY CPI Values - Jan 1.4%, Feb 1.7%, Mar 2.6%, Apr 4.2%, May 5.0%, Jun 5.4%.
As you can see, the trend with or without base effects is upward steeply. The shorter the term, the larger the annualized rise. Furthermore, the months Jul-Dec 2020 only totaled 1.6% increase in CPI, meaning for the last 6 months of the year, for us to finish with a 5.5% rise in CPI for 2021, we have to average less than 0.3% increase per month. Only January 2021 has been at that threshold and no months have been below it. It should be noted that a 5.5% rise in the CPI as it is currently calculated is truly ridiculous.
Bottom line, with simple math, inflation is not transitory, there are no trends that point towards that. Inflation as measured by government CPI for 2021 will definitely be above 5% and could possibly be as high as 10%...I'm betting on the number being 8-9% at the end of things. This doesn't even take into account the calculation changes in CPI making it impossible to compare with values before 1990.
The Fed can't fight it. A proposed/discussed 0.5% base rate hike (2 bumps) in 2022-2023 is like one man shooting a super soaker at a Western US wildfire and expecting it to be contained.
So, be glad you know and have seen these things and have hedged yourself with shiny, shiny silver for the coming storm.
The powers that be would have you believe that inflation is transitory.
Originally it was due to base effects present from April to July of 2020. The low levels of the CPI then are artificially pumping up the YoY values seen currently. This idea is losing steam quickly, but has still been thrown around on occasion. Next it is that certain items like used cars are skewing the values. This may be correct, but as prices stay high, even if used cars normalize, other items will move up to take their place.
Very few are even discussing the bogus number being used for housing right now which shows next to no price increases for shelter even though we are in a seller's bubble on real estate.
All is laughable, given the hypocrisy that is the CPI in the first place, let's still use some of their own values against them and try to get rid of these base effects that are being held up as part of the reason for what we are seeing.
Looking at a chart of YoY inflation, it can easily be seen that there is a dip from April to July 2020 before the CPI flattens from July 2020 to January 2021 at around 1.5%. Let's look at some shorter term annualized CPI values for 2021 though and see if trends develop.
Monthly CPI Annualized - Jan 3.6%, Feb 4.8%, Mar 7.2%, Apr 9.6%, May 7.2%, Jun 10.8%.
Quarterly CPI Annualized - Jan 2.8%, Feb 3.6%, Mar 5.2%, Apr 6.8%, May 8.0%, Jun 9.2%.
Bi-Annual CPI Annualized - Jan 2.6%, Feb 2.8%, Mar 3.6%, Apr 5.0%, May 5.8%, Jun 7.2%.
YoY CPI Values - Jan 1.4%, Feb 1.7%, Mar 2.6%, Apr 4.2%, May 5.0%, Jun 5.4%.
As you can see, the trend with or without base effects is upward steeply. The shorter the term, the larger the annualized rise. Furthermore, the months Jul-Dec 2020 only totaled 1.6% increase in CPI, meaning for the last 6 months of the year, for us to finish with a 5.5% rise in CPI for 2021, we have to average less than 0.3% increase per month. Only January 2021 has been at that threshold and no months have been below it. It should be noted that a 5.5% rise in the CPI as it is currently calculated is truly ridiculous.
Bottom line, with simple math, inflation is not transitory, there are no trends that point towards that. Inflation as measured by government CPI for 2021 will definitely be above 5% and could possibly be as high as 10%...I'm betting on the number being 8-9% at the end of things. This doesn't even take into account the calculation changes in CPI making it impossible to compare with values before 1990.
The Fed can't fight it. A proposed/discussed 0.5% base rate hike (2 bumps) in 2022-2023 is like one man shooting a super soaker at a Western US wildfire and expecting it to be contained.
So, be glad you know and have seen these things and have hedged yourself with shiny, shiny silver for the coming storm.