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Last week in an interview with Wolf (Puppy Dog) Bllitzer on the Cartoon News Network (CNN), former Fed Head and current U.S. Treasury Secretary Janet Yellen told Blitzer, “I think I was wrong then about the path that inflation would take,” after he played clips of her saying back in 2021 that inflation posed a “small risk” and would be “temporary.”
Indeed, we reported in “Powell, Yellen Agree: Higher Inflation Ahead” (26 Oct 2022) that they were continually saying there were no inflation worries.
“There have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that I didn’t—at the time—fully understand,” she said on CNN.
Yellen, U.S. Federal Reserve chair Jerome Powell, and other officials consistently framed rising prices as “temporary” and then “transitory” during 2021, until Powell acknowledged that characterization was wrong (“The Powell Push: For Better or Worse,” 7 Dec 2021).
TRENDPOST: Despite Yellen’s overt failure to see inflationary realities, she refused to admit she was too deaf, dumb and blind to recognize high-rising inflation. She did not say she “was wrong.” Instead, the narcissistic egotist said, “I think” I got it wrong.
You “think”?
TRENDPOST: We had long ago forecast stronger inflation in articles such as our Economic and Markets Overview sections in our 27 October, 2020 and 3 November, 2020 issues and documented it through last year in our Markets Overview sections on 23 February, 2021 and 18 May, 2021, “Inflation Spreads” (12 Oct 2021) and “Inflation on the Rise” (7 Dec 2021), among a host of other articles.
However, Yellen continued to echo Powell’s assertions of “disinflationary pressures around the globe” early last year, then for several months parroted his assertion that high inflation is “temporary,” then “transitory.”
Like the Fed itself, which she once chaired, Yellen has lost all credibility as an economic seer.
TRENDPOST: First, inflation was “temporary;” then it became “transitory,” a more effective weasel word that implies an even more vaguely defined period of time.
Now Powell knows what everyone else, especially Trends Journal readers, have known for more than a year: inflation is a serious, long-term threat to the U.S. and global economies.
In an August speech, Powell listed five factors convincing him that high inflation was “temporary.” One of them: the absence of “broad-based” inflation.
At the time he spoke, inflation already had widely permeated commodities and consumer goods (“Commodities Supercycle Underway?” and “Inflation Ripples Through U.S. Economy,” both from our 11 May 2021 issue).
Powell was either deluding himself, deliberately misspeaking—perhaps to keep markets and shoppers calm—or he and the Fed staff are abysmally incompetent at reading numbers available in news reports.
TREND FORECAST: We were among the first to forecast untamed inflation as a key factor facing the world after 2020’s economic shutdown (“Consumer Prices Rise in July,” 18 Aug 2021).
All signs indicate that rampant inflation would continue, for several reasons.
First, the Fed was unprepared to raise interest rates until it closes down its monthly bond purchases, a process the central bank has said would take several months.
Higher interest rates are a nation’s key weapon against inflation and the higher rates rise the slower the economy grows and the Feds, in partnership with Washington, artificially pumped up equities and the economy with record low interest rates.
Second, during the COVID War lockdowns, supply-chain kinks and gaps—including the absence of about 80,000 truck drivers in the U.S. alone in 2021—persisted.
Third, Americans manufacture less and less and import more and more, exposing the country more broadly to global financial pressures.
Fourth, with COVID War fear accelerating, consumers were buying everything they could grab.
Back in September 2021, for example, retail sales rose 15.6 percent compared to a year earlier, rising 0.7 percent from August; analysts had expected a slip of 0.2 percent.
Now, some of those trends have ended, but new ones, such as the Ukraine War have added new inflationary pressures. And with the war and sanctions, inflation has been driven higher in various business sectors and commodities.
Therefore, should the Ukraine War persist, so too will inflationary pressures.