Let’s just be blunt here.
Inflation is back in a big way. It’s not going to show up in the official numbers, but if you’ve paid for gas or food or healthcare recently, you’ve no doubt noticed that:
- Things are a lot more expensive
- You get way less bang for your buck (food packages are shrinking while prices remain the same)
This has been the case for some time now. However, the Fed’s QE 3 program, combined with the ECB’s OMT program, (both of which are “open ended” or “unlimited” in scope), have taken things to a whole new level.
Which is why we need to be concerned not with QE, but with UI: Unintended Consequences.
The Fed is largely composed of academics with little if any professional/ banking experience. These are people who use flawed data (case in point, the inflation measures in the US are a joke) to build models that they believe explain how reality works.
Setting aside the math and intelligence used to build these models, pure common sense begs the question, “how can someone who’s never worked in the real world, build a model to explain reality?”
The simple fact is that they can’t… which is why the Fed’s policies have and will continue to unleash a slew of Unintended Consequences.
For instance, QE 2, which saw the Fed spending $600 billion, pushed food prices to record highs, kicking off a wave of riots and civil unrest throughout the Middle East.
So what will QE 3 bring?
The short answer is: nothing pretty. Gas and food prices were already high before the Fed announced QE 3. They will be going much higher in the future (Oil is currently falling based on Saudi Arabia working with the US Government to suppress prices).
Higher inflation means higher operating costs for corporations. Corporate managers (folks with real world experience) will adjust accordingly, most likely by firing people.
Which pushes unemployment even higher.
This is just one example of the slew of Unintended Consequences we’re going to be facing as a result of the Fed’s actions. There will be others… none of them good.
On that note, the time to start preparing is now. The printers are running. The Great Currency Debasement has begun. Some folks will walk out of this mess winners. Most will walk out as losers.
At Phoenix Capital Research, we’re taking steps to insure our clients are among the winners. We have a host of FREE Special Reports devoted to helping readers prepare for the coming Debt Implosions in both the US and Europe.
We also feature a special report devoted to inflation as well as which investments will perform best during periods of high inflation (periods like the one we’re entering).
All of this is available 100% FREE at www.gainspainscapital.com [7]
Best Regards,
Phoenix Capital Research