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Prices for many products are potentially on the rise.
Inflation may be taking root as we see commodity prices in foodstuffs, building materials and metals on the rise.
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Inflation may be taking root as we see commodity prices in foodstuffs, building materials and metals on the rise.
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The chart below shows the US dollar index in a rather significant decline, having lost about 10% of its value in months.
The debasement of purchasing power has been catalyzed by this administration and the Fed's reckless disregard for sensible fiscal and monetary policy.
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The debasement of purchasing power has been catalyzed by this administration and the Fed's reckless disregard for sensible fiscal and monetary policy.
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Now, contrast the above chart of the US dollar index with a chart of the S&P 500, the broadest measure of the US stock market.
Notice how as the dollar declined, the market rose?
This is a direct cause and effect impact.
It illustrates how risk assets have benefited.
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Notice how as the dollar declined, the market rose?
This is a direct cause and effect impact.
It illustrates how risk assets have benefited.
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Meanwhile, in the real world, unemployment remains near record levels, at 10.2% in July, as measured by the Department of Labor U3 index.
What this is telling us, in no uncertain terms, is the stimulus did not help working Americans.
Instead it helped the investing class.
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What this is telling us, in no uncertain terms, is the stimulus did not help working Americans.
Instead it helped the investing class.
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This experiment in kleptocratic fiscal and monetary policy has, in effect, transferred an inordinate amount of wealth from American tax payers (both present and future) to those that needed money the least.
https://yourstory.com/2020/08/mark-zuckerberg-jeff-bezos-bill-gates-100-billion-facebook
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https://yourstory.com/2020/08/mark-zuckerberg-jeff-bezos-bill-gates-100-billion-facebook
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Meanwhile, the US debt-to-GDP ratio has reached a new record of 136.5% of GDP, surpassing the previous record set during World War 2, with a stunning $26.6 trillion in debt that's rapidly rising.
6/ https://www.ourmidland.com/opinion/voices/article/It-s-a-record-Not-one-to-celebrate-15453798.php
6/ https://www.ourmidland.com/opinion/voices/article/It-s-a-record-Not-one-to-celebrate-15453798.php
And credit rating agencies are taking note.
Fitch lowered its outlook on US credit to "negative."
Longer term this could make it more expensive for the US to issue debt, as well as discourage institutional and foreign investment in treasury bonds.
7/ https://abcnews.go.com/Business/wireStory/fitch-lowers-outlook-us-credit-rating-negative-72112805
Fitch lowered its outlook on US credit to "negative."
Longer term this could make it more expensive for the US to issue debt, as well as discourage institutional and foreign investment in treasury bonds.
7/ https://abcnews.go.com/Business/wireStory/fitch-lowers-outlook-us-credit-rating-negative-72112805
It's reasonable to expect that the policy of debasing the dollar to boost asset prices will continue.
We can expect prices of goods and services may rise, as inflation takes root.
And the Fed doesn't have many tools to fight inflation without sabotaging the stock market...
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We can expect prices of goods and services may rise, as inflation takes root.
And the Fed doesn't have many tools to fight inflation without sabotaging the stock market...
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So, while most outcomes are not binary, the two scenarios that lay before us are likely:
1) inflation that causes our cost of living to rise substantively; or
2) a deflationary crash, that meaningfully decreases the value of stocks, real estate and other asset classes.
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1) inflation that causes our cost of living to rise substantively; or
2) a deflationary crash, that meaningfully decreases the value of stocks, real estate and other asset classes.
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