Years of Recklessly Low Interest Rates Causes Inflation to Soar

Friday, November 16, 2018
By Paul Martin

By: Nathan McDonald
GoldSeek.com
Friday, 16 November 2018

The stock market has been rising, GDP has been rising, and the rate of unemployment has been steadily dropping since the Republicans took office, however, as good as news as this is, something sinister has been continuing to unfold behind the scenes.

In all likelihood, you are intensely aware of what I am referring to, especially if you are the one who does, or participates in the majority of the shopping for your household.

Inflation continues to soar higher and in a meaningful way.

The increased cost of many commodities has caused a rippling effect across the broad general market, as both staple goods such as food and luxury goods such as computes, cars, etc, have risen significantly.

Two commodities that have been hit especially hard are aluminum and steel, the former of which has risen by 8%, and the latter of which has drastically increased by 38% year over year.

Household staples, such as soap, shampoo, toothpaste, you name it, have increased year over year as well, with most companies disclosing in their recent quarterly earnings, that they have had to pass their increase in production cost, directly onto the consumer.

Luxury goods, such as those produced by Apple, have increased by 20-25%, while autos, such as those produced by GM, have had to raise their sticker prices by $800.

Years of recklessly low interest rates have caused this situation in large part, and we are just witnessing the beginning trickling out of “easy money”, reentering the system for the first time in a meaningful way since the 2008 crisis began.

Before this point, money has been flowing endlessly back into the stock market, causing historic runs higher, as fast money chased new monthly highs, however, as we have seen recently, investors are becoming increasingly skittish of this artificially high stock market.

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