The Fed’s “Frankenstein” Policies Are About to Turn on Their Master
By: Graham Summers
GoldSeek.com
Monday, 22 January 2018
The financial media is finally catching on to something we’ve been screaming about for years…
That the Fed’s preferred metric for measuring inflation is a complete joke.
Making matters more difficult, the Fed’s preferred inflation gauge does a pitiful job of capturing the quandary facing many households that live paycheck to paycheck. The so-called core PCE is the central bank’s go-to inflation metric. It is derived by netting out the necessities of food and energy from personal consumption expenditures. But the core PCE also minimizes the weight of rent and over-emphasizes health care due to Medicaid and Medicare’s inputs.
Source: Bloomberg
What the article misses is that the scheme is intentional.
The reality is that since the US abandoned the Gold Standard in 1971, the Fed has effectively been “papering over” declining living standards in that the actual “cost of living” in the US has soared relative to real incomes.
This fact stares all of us in the face every day. Back in the late ‘60s / early ‘70s, one parent worked and most Americans had a decent quality of life. Today both parents typically work and are one financial emergency away from being broke.
The Fed masks this by understating inflation and by providing an endless stream of easy credit/ debt. This is why the Fed’s continuous “gosh, inflation is just too low… we better keep on printing money forever,” shtick is so ridiculous.
However, like the famous Frankenstein monster, the Fed’s inflationary policies are about to turn on their master.
The fact is that inflation is actually clocking in well over 3%. And it’s about to blow up the Everything Bubble.
Bonds trade based on inflation.
If inflation rises, so do bond yields.
When bond yields Rise, bond prices FALL.
And when bond prices FALL, the massive debt bubble begins to burst.
The Rest…HERE
