Janet Yellen just made one of the stupidest claims in financial history.
Yellen is the current Treasury Secretary. Prior to this role she served as Chair of the Federal Reserve. Throughout her tenure at both roles, she’s proven herself to be a clueless academic with little if any understanding of the real economy or financial system.
However, her latest statement on inflation has been an absolute gob-stopper.
Last week, Yellen stated that President Biden’s $4 trillion spending plan would be good for the U.S., even if it contributes to rising inflation and results in higher interest rates.
There are two whoppers in this statement. They are:
1) Higher inflation is good for the U.S.
2) Higher interest rates would be good for the U.S.
Let’s dissect each of them…
Regarding #1, Yellen’s statement has the implicit idea that inflation isn’t already a concern. This is patently false.
Over the last year, the price of everything Americans eat or depend on for building/ energy has spiked. Agricultural commodities, which are the basis of the food we eat, are up 62%. And they are the laggard here!
Copper is up 108%, gasoline is up 260%, and lumber is up an incredible 298%.
Now, higher prices aren’t necessarily a disaster provided incomes are rising at a similar pace. If inflation is 5%, but incomes are growing at 5% or more, the damage done to the economy and average Americans isn’t disastrous.
Over the same time period, when the cost of commodities, particularly those for food and energy on which American rely to survive, are up at least 50% , incomes rose a maximum of 30% year over year before rolling over and nose-diving in April 2021.
Put simply, incomes in the U.S. are growing at nowhere near the pace of prices. So, the idea that even higher inflation would be “good” for the U.S. is ludicrous.
We’ll dig into the second whopper of Treasury Secretary Yellen’s statement tomorrow. But the take home fact we need to focus on right now is that the person in charge of the U.S. financial system believes higher inflation would be good for the U.S… at a time when inflation is already roaring!
This means inflation is only going to get worse from here. Smart investors will make a fortune from. However, those who are unprepared will get taken to the cleaners.
On that note, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation as it rips through the financial system in the months ahead.
The report is titled And it explains in very simply terms how to make inflation PAY YOU.
We are making just 100 copies available to the public.
To pick up yours, swing by:
Chief Market Strategist
Phoenix Capital Research