Why We’ll Continue to Have High & Sticky Inflation Ahead…

The comments below are an edited and abridged synopsis of an article by David Stockman

An examination of the CPI weighting scheme sheds light on the high inflation readings that lie in the Fed’s inflation-fighting path ahead.

Why We’ll Continue to Have High & Sticky Inflation Ahead... - BullionBuzz - Nick's Top Six
Men trying to reach the shopping cart that rises up on the arrow. (Used clipping mask)

For instance, food and energy account for 22.1% of the CPI, but there is a difference between the commodity component of these items versus the portion in which services and domestic labour costs are mixed into the figures.

Stockman delves into the gap between soaring grocery store prices and the more restrained restaurant menu prices, and comments that the latter will eventually catch up to the grocery store commodity components and then some. He also examines the case for energy, and concludes that the bifurcation is even more extreme.

Keynesian money-printers inflated the greatest financial bubble in history owing to the absurd belief that there wasn’t enough goods and services inflation, and the central bank was therefore obligated to stimulate higher inflation from below.

Now, however, this illusive inflation is deeply embedded and still gathering momentum. So getting down to a 2% inflation target means only one thing: Namely, that they will blow sky high the very same financial bubbles they fostered on the way to the present monetary catastrophe.

“The truth is, we’re on the cusp of an economic crisis that could eclipse anything we’ve seen before. And most people won’t be prepared for what’s coming.”

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