TREND TRACKING LESSON: HOW THE TRENDS JOURNAL WAS RIGHT ON INFLATION WHILE FED, BUSINESS JOURNALISTS GOT IT WRONG

The prevailing wisdom is that the Federal Reserve and large business news organizations who cover the central bank have some kind of valuable insight about future moves when it comes to fighting inflation.

Greg Ip, a columnist for The Wall Street Journal, wrote a piece last week about how only a precious few economists devoted any mention at all on how their models could miss the inflation trend so badly. 

He wrote that economists at the U.S. central bank were essentially blindsided and pointed out that the European Central Bank wrote recently that the “accuracy of its inflation forecasts ‘declined significantly during the COVID-19 crisis.’”

When central banksters release inaccurate projections that is a major problem for corporate media outlets who cover business news because they are an echo chamber for these central banks. Few of these journalists have the experience to dissect press releases from the Fed, and simply repeat the lies that inflation is “transitory.”

These outlets speak to the same few economists deemed acceptable sources from these corporate power centers. There’s also no need to apologize when their predictions are wrong because everyone got it wrong. 

The Journal also published an article last week that questioned how so many “private forecasters” and others “failed to anticipate the magnitude and duration of higher inflation.”  

The Labor Department announced last week that the consumer-price index increased 8.6 percent in May from the same month a year ago, which is the fastest pace in over 40 decades. The Fed has set 2 percent as an acceptable inflation rate.

The result is that Americans have been forced to dip into their savings accounts to cover these rising costs. A recent Forbes Advisor survey found that 70 percent of Americans are tapping their savings accounts. The Bureau of Economic Analysis also found that personal savings is at its lowest for Americans since 2008.

The central bank announced earlier this month that it will raise interest rates by 75 basis points, which means it costs more money to borrow. The average rate on a 30-year fixed home loan hit nearly 6%. The BBC reported that the person buying a median-priced home in the U.S., is now on the hook for monthly payments that have gone up by about $600 since January.

Treasury Secretary Janet Yellen admitted that she was wrong “about the path that inflation would take.” Fed Head Jerome Powell said similarly that he anticipated inflation was “transitory” and kept interest rates at about zero while inflation jumped above 6 percent.

Gerald Celente has warned about the inflation risk on the economy for nearly two years. In June 2020, we were the first publication to forecast that equities and economies would come tumbling down when inflation moved sharply higher.

We published on 11 May 2021 that inflation is a hot trend that will keep rising, and despite the Fed claiming they have the “tools” to deal with it, the only tool they have is to raise interest rates. As we repeatedly note, when interest rates rise, equities and the economy will deeply dive.

A Trend Forecast in October also warned Europe about inflation:

The European Central Bank (ECB) has continued to insist that inflation will be moderate and transitory (“ECB Head Downplays Inflation,” 25 May 2021). And, they say they will not raise interest rates or stop their quantitative easing schemes… we disagree. 

Interest rates will rise, and with so many COVID War restrictions on their population, Europe will suffer Dragflation: the economy will decline and inflation will rise… and so too will anti-establishment political movements. 

As we noted in “Fed: Stronger Economy, Steady Rates” (23 Mar 2021), Fed officials predicted overall U.S. inflation this year would be 2.4 percent. 

Until November, Powell and the Fed’s Open Market Committee were referring to inflation as “temporary,” which became “transitory,” a more useful weasel word as what Powell had called “temporary” stretched into its 10th month. 

Of course, by October, inflation topped 6 percent. Fed officials downplayed price jumps and attributed them to supply-chain glitches that will untangle themselves as the economy recovers.

We warned in the spring of 2021 that prices will “keep rising and inflation will keep climbing, which will force the Fed to reverse policy quickly, halting its bond-buying scheme while raising interest rates… which will, in turn, tank equity markets and sink the nation into the “Greatest Depression.”

TREND FORECAST: The Trends Journal has long documented the Fed’s blindness. Now the Fed has two choices: jack up rates quickly, which would guarantee a recession, or raise rates more slowly, which would let inflation sink roots into the economy and be much harder to eradicate. 

We have no confidence in central Banksters who are basically shills for the Wall Street Gang and other equity market money junkies across the planet. Indeed, by their deeds you shall know them.

And by their deeds of dropping interest rates to negative and zero to artificially prop up equity markets when they should have crashed when politicians locked down economies is an undeniable “deed.” 

And their total bullshit, which we have greatly detailed, of denying the reality of inflation to keep the money flowing is another of their undeniable “deeds.” Therefore, again, as we have forecast, the higher they raise interest rates, the deeper economies will fall.