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November 11, 2021 | Blame the Supply Chain and Protect the Elite

Is an American author of books and articles on economic and financial subjects. He is the founder and president of Agora Publishing, and author of the daily financial column, Diary of a Rogue Economist.

Policy failures will be responsible for tens of thousands of families getting stranded at airports, paying exorbitant gas prices, and encountering grocery store shortages. Americans face the most expensive Thanksgiving on record.

– The Hill

BALTIMORE, MARYLAND – The Bureau of Labor Statistics (BLS) report came out just after we filed yesterday’s Diary.

The Washington Post broke the news:

Prices rose 6.2 percent in October compared with a year ago, the largest annual increase in about 30 years, as rising inflation complicates the political agenda for the White House and policymakers’ road map for the economy heading into the end of the year.

Overall prices rose 0.9 percent from September to October, tying June for the biggest one-month increase since the Great Recession. Only a few categories saw prices fall last month, including airfare and alcohol.

But don’t worry. Federal Reserve chairman Jerome Powell, who insisted that inflation was only “transitory,” now promises to make it go away:

…we understand completely that it’s particularly people who are living paycheck to paycheck or seeing higher grocery costs, higher gasoline costs, when the winter comes, higher heating costs for their homes. We understand completely what they’re going through. And we will use our tools over time to make sure that that doesn’t become a permanent feature of life.

But a 6% inflation rate wreaks havoc.

The current yield on the world’s most important asset – the 10-year U.S. Treasury bond – is only 1.46%.

The 10-year Treasury is the backbone of pension funds, corporate savings, Social Security, insurance programs, and other institutional holdings.

But at this rate, they’re losing 4.54% of their money each year. Who wants to take that deal?

That’s why U.S. deficits… like those in Argentina… are now being funded almost entirely by “printing press” money.

No Escape

We keep busy on weekends with DIY projects. Every time we go to the lumber yard, we’re staggered by the price increases. Overall, construction materials are up 31% year on year. Gasoline is running at 62% more than a year ago.

Meanwhile, wages are going up at a 5% rate. But subtract the losses from inflation, and the average working man is actually getting poorer. The Wall Street Journal reports that “real wages are down 2.2% since January.”

That’s the way the inflation tax works… It falls most heavily on the poor and middle classes, who have no way to escape it.

Clean Getaway

The feds added about $3 trillion in new cash – based on the Fed’s balance sheet – between 2007 and 2019… and then another $5 trillion since then.

Those chickens are now descending on the U.S. economy, like a flock of vultures.

And so, the inflators are doing their best to lay the blame anywhere and everywhere… except where it belongs.

Joe Biden has already told the Federal Trade Commission to find some patsies. It is supposed to “strike back at any market manipulation or price gouging [in the energy sector],” he says.

And yesterday, he came to Baltimore again. He went down to the harbor and pretended to “do something” that will solve the “supply chain disruption” problem, whatever that is…

The Washington Post, a “paper of record” for U.S. politics and an all-purpose shill for the ruling elite, eagerly helped mislead the public. Here’s the subhead from yesterday’s article quoted above, pointing the finger in the wrong direction, so the real culprits can make a clean getaway:

It’s unclear when supply chains will clear, especially given how vulnerable the economy remains to the pandemic.

Damned supply chains!

From Bad to Worse

According to the servile press, Biden’s $1 trillion in new “infrastructure” spending – almost every penny of which will be financed with more printing-press money – will help fix the “supply chain problem.”

We can’t wait to see the follow-up story:

Biden Mends Supply Chains By Printing More Money; Prices Fall

Don’t hold your breath. Not going to happen.

First, because Biden knows nothing about supply chains, he has no clue about what’s wrong with them or how to fix them.

Second, because the supply chains are not the real problem. They’re just being used as a “rope-a-dope” by the elite press.

And third, because more money-printing will make the real problem – monetary inflation – worse, not better.

And so approaches the moment of truth, when the Fed will have to lay its cards on the table…

Raise interest rates to limit inflation?

Or let ‘er rip… Blame the supply chain and protect the elite?

Stay tuned…




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November 11th, 2021

Posted In: Bill Bonner's Diary

One Comment

  • Michael says:

    My bet: Fed Powell will let it rip and protect the the market bubble. He’s wants to be reappointed as Fed Chair in February. If reappointed, he will then raise rates and crush the markets. If not reappointed, he will likewise pop the bubble by advocating a new Fed policy of rate incresaes as a parting gesture. Either way, the month of February will be a month to remember for the markets.

    Jim, it would be great if you had an interview with Bill Bonner.

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