Why the Fed is Secretly TERRIFIED of Inflation

As I’ve been stating for weeks now, inflation is the big theme for 2018. Even the Fed’s ridiculous CPI measure is coming in higher than expected (though real inflation is now at 3%).

Why is this a big problem?

Because inflation is going to:

1)   Either blow up the Everything Bubble

2)   Force Central Banks to become more hawkish, thereby draining liquidity from the stock market.

As I outlined in my book The Everything Bubble: The Endgame For Central Bank Policy post-2008, the Fed created a bubble in US sovereign bonds, also called Treasuries.

And because these bonds are the bedrock for the current fiat monetary system, the “risk-free rate” of return against which all risk assets are priced, when the Fed created a bubble in them, it created a bubble in EVERYTHING (stocks, commodities, corporate bonds, real estate, etc.).

This strategy worked (as far as the Fed is concerned) provided the bond market continuWhy the Fed is Secretly TERRIFIED of Inflation ed to remain in a secular downtrend.

This is where inflation comes in.

Treasury yields trade based on inflation (among other things).

When inflation rises, Treasury yields rise to accommodate for this.

When Treasury yields rise, Treasury prices FALL.

When Treasury prices FALL, the Everything Bubble begins to burst.

Well guess what? Treasury yields are SOARING, having broken a 20 year downtrend.

Treasury yields

Put simply, this chart is telling us BIG inflation is on the way. The Everything Bubble is on borrowed time unless the Fed acts soon.

The time to prepare your portfolio is NOW before things really get ugly.

On that note, we are putting together an Executive Summary outlining all of these issues as well as what’s in terms of Fed Policy when The Everything Bubble bursts.

It will be available exclusively to our clients. If you’d like to have a copy delivered to your inbox when it’s completed, you can join the wait-list here:

https://phoenixcapitalmarketing.com/TEB.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Comments

Bemused Observer Wed, 02/14/2018 - 13:14 Permalink

They know there is no fixing this. So they let it blow up, then rush to introduce a new currency. Which they will use to try and 'move' all their wealth over to whatever new system they have in mind. Of course, YOUR wealth gets adjusted downwards...

Not that I think it will work. But they WILL try something bold, count on it. Why wouldn't they? If it's going down, they have nothing to lose by trying, and perhaps everything to gain. They are going to bet it all.

They are working on this right now, I'll bet. Looking at all the currency options, cash, crypto, metals, credit...seeing which one they can control best. They are also looking into US...seeing how far they might push us, what our fears are and how to capitalize on them. They'll promise us something in return, probably try and convince us we'll be able to keep more of our 'wealth' if we switch to their new money. Otherwise, they'll warn, your dollars may not hold their value.

gdpetti Wed, 02/14/2018 - 13:21 Permalink

Yeah, 'pulling the rug out' can be done fast or slow, the question is which one does the Fed's masters prefer?

ShadowStats inflation numbers: http://www.shadowstats.com/alternate_data/inflation-charts

1980 base: 10%

1990 base: just under 6%

both seem to reflect the Fed's desire to keep their number at ~2%... to maintain cost control.... so pulling that rug on this OWO is really what's going on... as none of this crap is needed in the oligarchic SG's NWO... out with the old, in with the new... thus all the modern pograms to push people around... the whole migrant/refugee issue based in our Western wars... some of which go back to past empires we had around the world. Add in the usual 'liberal' SJW BS.... to counter the 'conservative' crap, both BS'ing the masses into the usual kill zone.... culling the herd.

Kokulakai Wed, 02/14/2018 - 14:20 Permalink

Ben "No deflation on my watch" Bernanke wasn't afraid of inflation.

The Fed has been using the same play book since the gold confiscation in 1933.

Deflation kills banks.

Hyperinflation kills regimes.

The Fed's only allegiance is to themselves.

cougar_w Wed, 02/14/2018 - 14:54 Permalink

The velocity of money in the US seems to be about gone. People either have too much debt to borrow more, or they are too afraid to spend their nest egg. Either way it goes to zero. Unless TD finds a way to get people back into stores, this circus act is over.