Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19
The IPO Market Is Nowhere Near a Bubble - 9th Oct 19
US Stock Markets Trade Sideways – Waiting on News/Guidance  - 9th Oct 19
Amazon Selling Fake Hard Drives - 4tb WD Blue - How to Check Your Drive is Genuine  - 9th Oct 19
Whatever Happened to Philippines Debt Slavery?  - 9th Oct 19
Gold in the Negative Real Interest Rates Environment - 9th Oct 19
The Later United States Empire - 9th Oct 19
Gold It’s All About Real Interest Rates Not the US Dollar - 8th Oct 19
A Trump Impeachment Would Cause The Stock Market To Rally - 8th Oct 19
The Benefits of Applying for Online Loans - 8th Oct 19
Is There Life Left In Cannabis - 8th Oct 19
Yield Curve Inversion Current State - 7th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

US Actual Inflation Trend Heading for Stagflation or Deflation?

Economics / Inflation Apr 16, 2008 - 11:07 PM GMT

By: Jas_Jain

Economics Best Financial Markets Analysis ArticleInflationists have been crying wolf for the past three plus years despite the fact that the annualized headline CPI, including food and energy, and not seasonally adjusted, for 12M, 6M, and 3M has fluctuated around the 20-year trend of 3%+- (yes, the annualized inflation in the US for the past 20 years is 3.08%). As a matter of fact, despite huge run up in crude oil and agriculturals during the past year the CPI rates in the graph are below their highs during 2005-07. Labor costs are by far the most dominant contributor to the CPI.


Greenspan-Bernanke have followed a controlled inflation regime of 3% rather than the proclaimed policy of “price stability.” Why they have followed such a regime is a very profound question and its real answers will reveal the criminal nature of the Federal Reserve – harming the general population for the benefit of Bankrupters and Fraudsters of New York City – but I will cover that at some other time. The whole financial system (and the economy) has been criminalized with the tacit support of the Fed and the USG.

Inflation rate lags the economy and there is nothing like a severe recession to bring the headline CPI rate crashing down. For example, the double-dip recession of 1980-82 brought the inflation rate down from 15% to 4%. The controlled inflation regime will come to an abrupt end as the recession turns into something more serious than the last two recessions. The $64K question is: In which direction? My forecast is that it will crash on the downside, i.e., come down sharply, while some still talk about stagflation and “hyperinflation.” Stagflation was 70s show and that show (or movie) will not replay. Sorry, I don't buy into Shadow Statistics and M3 as proxy for the inflation rate.

Increase in the total household debt is inflationary and decrease in the household debt is deflationary. A very high rate of growth in the household debt, mostly via loose mortgage lending, became necessary to support the controlled inflation regime since 2002 and to artificially boost the economy for political purposes. Now that game is coming to an abrupt end due to the mortgage credit crisis. It is too bad for Bush's legacy and for McCain that the game came to an end a year too soon. Manipulations to boost the economy only work for so long before they turn against. 

The housing bubble postponed the deflationary depression of the Longwave and its burst will usher in the inevitable. The incessant interventions from the Fed and the USG will dampen the severity but they will also prolong the depression by postponing the adjustments that need to take place, especially, 30-50% drop in home prices, nationally, and more in the bubble areas. “Bankers' mischief” (imprudent loans and financing) never fails to bring on economic and financial “catastrophes,” according to Schumpeter. Needless to say, the “bankers' mischief” attained new heights in recent years. One wonders what the Fed and the USG were doing. Isn't it amazing that these things get worse over time in subsequent cycles? Crooks learn from history (how to do it) and the general population doesn't! Bubbles are superb lubricants for fraud. 

It is the Debt, Stupid! (That will dictate the direction of the inflation rate).

By Jas Jain , Ph.D.
the Prophet of Doom and Gloom

Jas Jain Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules