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By Gregory Mannarino TradersChoice.net
The current narrative coming directly from Federal Reserve Chairman Jerome Powell is this, “The Current Spike in Inflation Is Transitory.” This supposed “inflation is transitory narrative” is being used as a tool to suppress the truth, and the truth is this. Not only is the current pace of inflation NOT transitory—but it is also about to get much worse.
Economics 101 tells us this regarding the current environment. The Federal Reserve has been on a money creation binge, which has been unlike anything which has ever been seen in the history of the financial world, since the meltdown of ‘08. This mechanism has introduced a tsunami of dollars, most of which only exist in digital form, disbursed all around the world.
I have warned people for many years that there would be a time when all these extra dollars, in whatever form they exist, would eventually begin to chase the same or existing amount of goods—well we are seeing the opening act right now. Moreover, there is no way to stop it.
Fed Chairman Powell also said that he is not concerned about the current pace of rising inflation because it is “not widespread,” in other words, he believes that inflation is contained.
Contained? Where have we heard that before?
How about when then Chairman of the Federal Reserve Ben Bernanke was talking about the housing bubble? Yes, Bernanke said then that the issue with subprime mortgage meltdown was also “contained.” Ben Bernanke’s “contained” played out to be totally false and led to a global financial meltdown—and public bailout of the banks.
Today more and more corporations are posting warnings about more inflation to come, and it is not contained. Several CEOs of Blue-Chip companies are coming right out and saying “inflation is not transitory;” it is going to be sustained and it is structural.
Once the floodgates of inflation have been opened, and they certainly are now, there is no way to stop it.
There is a lot of talk about the Federal Reserve “tapering,” or cutting back on asset purchases—well this will have ZERO effect of slowing the pace of inflation. Theoretically the ONLY way in which the Fed today can even just slow the current pace of inflation would be to dramatically increase rates rapidly, and the effect of that would lead to a total meltdown of the stock market and a bursting of the current housing bubble.
I expect that over the next several weeks the narrative coming from the mainstream media outlets will be this—inflation is slowing. But this will be a false narrative, meant to distract the general population from what is really going on.
This false narrative on inflation slowing or waning will then leave people vulnerable and unprepared for the next, larger wave of inflation which is coming. Unprepared and vulnerable—just as it is meant to do.
Nothing whatsoever of what we are seeing today is by accident and as I always say, “be ready for anything.”