The Inflation Tax Levied By The Federal Government Rose To 8.62% In October (Biden Interviews Brainard For Fed Chair Position)

Now that President Biden is interviewing Lael Brainard for Federal Reserve Chair, I am really getting a peaceless, uneasy feeling that The Fed will NEVER raise rates and inflation will be perpetual. To whit, …

Prices paid to U.S. producers accelerated in October, largely due to higher goods costs, fueling concerns about the persistence of inflationary pressures in the economy.

The producer price index for final demand increased 0.6% from the prior month and 8.6% from a year earlier, matching forecasts, Labor Department data showed Tuesday. The annual advance was the largest in figures back to 2010.

Excluding the volatile food and energy components, the so-called core PPI rose 0.4% and was up 6.8% from a year ago.

Prices paid to U.S. producers rose in October, reflecting in part higher energy costs

More than 60% of the headline increase was due to goods, which jumped 1.2%. Higher energy costs, including that for gasoline, drove the gain. The cost of services rose a more moderate 0.2% for a second month, reflecting a further pullback in the cost of securities brokerages and investment advice.

The report underscores how transportation bottlenecks, materials shortages and increasing labor costs have sent prices soaring across the economy in recent months. Trucking freight costs jumped a record 2.5% from September.

Inflation is a tax created by printing too much money and stupid Federal economic policies (or follicies).

Lael Brainard? Discussing the chairmanship with Brainard could signify that the Biden team is weighing how a break with Powell might help advance their goals for the central bank. Brainard and Powell work closely together on multiple issues and are viewed as holding similar views on monetary policy, but she’s favored a tougher stance on big banks.

Remember, The Federal Reserve is a privately-owned entity independent of The Federal Government. A Brainard appointment would make The Fed the financing arm of the Democrat Party.

Stimulypto! 10-year REAL Treasury Yield Is -3.9364% And REAL 30-year Mortgage Rate Is -2.30%!

Yes, the US economy has been greatly overstimulated by the Federal government (fiscal stimulus) and The Federal Reserve (monetary stimulus). This has caused inflation that we haven’t seen in a long time.

How overstimulated in the economy? The REAL 10-year Treasury yield (nominal less CPI YoY) is now -3.9364% and the 30-year REAL mortgage rate is -2.30%.

When will Federal stimulypto end?

Ethereum Is A Runaway Train! $4,358 Versus $129 On April 1, 2020 When COVID And The Fed Struck

Cryptocurrencies are a runaway train. In particular, Ethereum has gone from $129 on April 1, 2020 to $4,358 today.

Yes. March 2020 is when Covid struck and The Federal Reserve counterattacked.

Has volatility increased for the cryptos? Of course. The skew to the upside is steep on Bitcoin.

What To Expect Today From The Fed Open Market Committee (No Rate Change, Slight Decrease In Asset Purchases As M2 Money Velocity Collapses And Real Hourly Earnings Growth Is Negative)

From The Land of 1,000 Excuses, The Federal Reserve Open Market Committee (FOMC) will announce … no rate increases and a slight reduction in their assets purchases (Treasuries and Agency MBS). The announcement will be at 2pm EST (not at The Midnight Hour).

The Federal Open Market Committee is all but certain to hold rates near zero after a two-day policy meeting and announce a $15 billion monthly reduction in bond buying from the current $120 billion pace, judging that the test for tapering has been met as the economy heals from Covid-19.

There are two rate increases baked into the Fed Funds futures data as of today.

But a troubling aspect of The Fed’s monetary policy is that M2 Money Velocity is near the lowest in history and The Fed has been binge printing. What this means is that money printing has had little impact on GDP growth.

When The Fed mentions the post-COVID recovery, I hope they mention that REAL hourly wage growth is NEGATIVE.

And REAL S&P 500 earnings yield is also negative.

The Fed will likely to blame TRANSITORY effects such as the backed-up port traffic in Long Beach for rising prices rather than their flooding the markets with too much money.

But The Fed will continue to print, even though they will blame bottlenecks for inflation rather than their haphazard drowning of the economy in money.

Given that The Fed is monetizing the reckless spending by The Federal government, particularly Pelosi’s latest budget, we will see coordination between Chairman Powell and Treasury Secretary Janet Yellen (aka, Mustang Sally).

Call Jerome at 634-5789 to tell him to raise rate to normal levels.

Escape From LA II? Corelogic Home Price Index UP 18% YoY, But Forecast To Slow To 1.9% YoY In 2022

Yes, home prices are still growing at a super-hot pace of 18%, according to Corelogic.

But the forecast for home price growth is for 1.9% YoY in 2022.

As home price growth crashes back to earth as wages don’t keep pace with home prices.

Home prices have been growing in most states out west where The Fed’s money pump has resulted in a boom in second homes and people escaping high tax California and Oregon for Nevada, Idaho, Arizona (again), Utah and Montana. The east coast is seeing the Carolinas booming along with Florida and Indiana. Escape from New York?

Escape from LA … to Arizona, Nevada, Idaho and Utah?

ECB’s Lagarde Sees Higher Inflation; Pushes Back On Rate-hike Bets (ECB Keeps Foot On Monetary Gas Pedal Despite Inflation)

Its the same all over the world … insane central bank policies and resulting inflation.

I have discussed the US Federal Reserve in depth, but its time to focus on Europe’s European Central Bank (ECB) and their President Christine Lagarde.

FRANKFURT, Oct 28 (Reuters) – European Central Bank President Christine Lagarde acknowledged on Thursday that inflation will be high for even longer but pushed back against market bets that price pressures would trigger an interest rate hike as soon as next year.

With central banks around the world signalling tighter policy amid rising prices, Lagarde said the ECB had done much “soul-searching” over its stance but concluded that inflation was still temporary, so a policy response would be premature.

Soul-searching? The ECB is just doing what Powell and the Fed (aka, Jerome Jett and the Blackhearts) are doing. Keeping the foot on the monetary gas pedal in the face of inflation.

Let’s start Eurozone inflation. It is now sitting a 4.10% YoY. And core inflation is sitting at 2.10% YoY. Inflation is now the highest since 2009 while core inflation is at the highest since 2001.

Like the Federal Reserve, the ECB still has its foot on the monetary accelerator pedal despite booming inflation.

So, Christine, 19 nations in “Europe” having negative 2-year sovereign yields isn’t low enough for you?

The ECB’s platform in Frankfurt reminds me of a bad TV quiz show where participants try to guess prices next year. Call it “The Price Is Wrong.”

Unless, of course, the ECB sees a massive depression ahead.

U.S. Employment Costs Rise at Record Pace as Wages Surge (Personal Income Declines -1.04%)

U.S. employment costs rose at the fastest pace on record in the third quarter as companies across a variety of sectors raised wages against a backdrop of labor shortages.

The employment cost index, a broad gauge of wages and benefits, rose 1.3% from the prior quarter, according to Labor Department data released Friday. The gauge increased 3.7% from a year earlier.

Although there was a record jump in wages and salaries, personal income was reported to have dropped -1.04% in September. On a YoY basis, personal income fell to a 4.15% growth rate. Even more disturbing, the Case-Shiller national home price index is still rising at a near 20% pace.

Stimulypto! US Q3 Real GDP Falls To 2% QoQ On Consumption Crash (Atlanta Fed GDPNow Falls To 0.195%)

Despite the staggering and unorthodox monetary stimulus from The Federal Reserve, US real GDP continues to fall. The Q3 real GDP report is out and real GDP QoQ fell to 2%. Not surprising given that the Atlanta Fed’s GDPNow tracker is at a dismal 0.195% and falling.

The culprit? Personal consumption fell to 1.6% in Q3 after hitting 12% in Q2.

The GDP price index actually declined slightly from 6.1% to 5.7%.

Of course, Bloomberg blames the decline in GDP on supply constraints … which were created by The Fed and Federal government dumping trillions of dollars of stimulus. While the monetary stimulus is still raging, Federal government stimulus has worn out. To paraphrase BB King, “The fiscal stimulus is gone.”

Yes, The Federal Reserve and the Federal government reacted insanely to the Covid crisis and created a total mess (including ill-advised government lockdowns of the economy, stimulus to households who already were employed, etc.)

Bloomberg News headline of “U.S. Posts Weakest Growth of Pandemic Recovery on Supply Woes” misses the point that The Fed and Federal Reserve CAUSED the supply woes. It reminds me of an episode from the British comedy series “Blackadder” with Rowan Atkinson, Hugh Laurie and Stephen Fry.

General Melchett:
[explaining why they can’t rescue Captain Blackadder] Now George, you remember when I came down to visit you when you were a nipper, for your sixth birthday? You used to have a lovely little rabbit, beautiful little thing, do you remember?

Lieutenant George:
Flossie.

General Melchett:
That’s right, Flossie! Do you remember what happened to Flossie?

Lieutenant George:
You shot him.

General Melchett:
That’s right! It was the kindest thing to do after he’d been run over by that car.

Lieutenant George:
By *your* car, sir.

General Melchett:
Yes, by my car. But that, too, was an act of mercy when you remember that that dog had been set on him.

Lieutenant George:
*Your* dog, sir.

General Melchett:
Yes, yes, my dog. But what I’m trying to say, George, is that the state young Flossie was in after we’d scraped him off my front tyre, is very much the state that young Blackadder will be in now: if not very nearly dead, then very actually dead!

For those of you who watched Blackadder, think of The Fed and Federal government as being populated by Baldricks.

Speaking of people acting like Baldrick …

Atlanta Fed GDPNow Tracker Falls To 0.2% Despite Massive Fed Stimulus

Despite monetary Stimulypto from The Federal Reserve (still growing!), US real GDP has fallen to almost zero.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2021 is 0.2 percent on October 27, down from 0.5 percent on October 19. After the October 19 GDPNow update and subsequent releases from the US Census Bureau, the National Association of Realtors, and the US Department of the Treasury’s Bureau of the Fiscal Service, a decrease in the nowcast of third-quarter real government spending growth from 2.1 percent to 0.8 percent was slightly offset by an increase in the nowcast of third-quarter real gross private domestic investment growth from 9.0 percent to 9.3 percent. Also, the nowcast of the contribution of the change in real net exports to third-quarter real GDP growth decreased from -1.56 percentage points to -1.81 percentage points.

US Home Prices Still Soaring! Case-Shiller National HPI UP 19.84% YoY In August As Fed Stimulus Remains (Phoenix AZ UP 33.31%)

Between The Federal Reserve’s unorthodox monetary policy and insane spending from Congress and Biden Administration, we are seeing a near 20% rise in home prices for August.

Please note that pre-COVID the Case-Shiller home price index (national) was growing at 4%. Thanks to Fed Stimulypto, home prices are roaring at near 20% YoY.

Phoenix AZ home prices are growing at a 33.31% pace. The slowest growing? The US “shoot ’em up” capital, Chicago, is growing at 12.72% and is the slowest growing Case-Shiller 20 city.

I feel like I am living in the movie “Cloverfield” with The Federal Reserve as the uncontrollable monster.

UPDATE: Columbus Ohio as of Q2 2021 is growing at a 13% YoY pace.