Category Hyper Inflation
Supply Chain Crisis and Inflation
Armstrong Economics Blog/Inflation Re-Posted May 17, 2023 by Martin Armstrong
COMMENT: Hello Mr. Armstrong. Thank you for my daily dose of reality. Your blog is one of the last sources of untainted news. I would like to show these pictures my daughter sent me last week. We live in an affluent neighborhood in New Jersey where petty theft does not occur. The news outlets have not mentioned baby formula shortages. I do not believe they are locking up the baby formula to prevent crime. What is going on here?
Thanks — C.G.
REPLY: The supply chain issue has never been resolved. It improved from the days of bare shelves in the grocery stores, but many essentials are stuck in the pipeline. Products that expire will see additional shortages naturally. The supply shortage is fueling inflation and raising rates will not solve the problem.
The Fed thinks that raising rates will curb inflation by raising the cost of borrowing. That is not the problem here. Part of the inflationary crisis we are witnessing is due to demand outweighing available supply across industries. The Fed cannot control government spending nor the money supply. People are viewing the crisis today from the perspective of the ‘60s when it was NOT possible to borrow on T bills. After the collapse of Bretton Woods in ’71, you COULD trade off government debt and that eliminated the idea that it was less inflationary to borrow rather than spend. Artificially low rates that created a borrowing addiction among institutions who believed it was safe to do so.
Powell cannot come out and criticize Congress for their spending. These rate hikes are not good for the supply chain shortages. Inflation went up two years before the Fed even addressed rates due to the supply chain crisis. The central bank only began to hike rates after the war in Ukraine began. Notice how at the last meeting, the FOMC incorporated that they will monitor “international events.” WAR is the primary driver of inflation and there is nothing that the central bank can do to prevent the destruction caused by government and years of poor monetary policy.
Study Puts Data Together Showing Joe Biden Inflation Impact on Pet Food Products
Posted originally on the conservative tree house on May 16, 2023 | Sundance
We have talked about the stunning price increases in pet foods during our discussions about food price overall. However, a remarkable study by Veterinarians Org gives some context to just how much the Joe Biden inflation has driven up the cost of pet foods. [ARTICLE HERE]
Mostly driven by Biden’s created inflation hitting raw farm materials, energy prices, manufacturing and transportation costs, the prices for the most popular wet and dry dog foods have skyrocketed.
One in four pet owners have even contemplated giving their animal up for adoption because they can no longer afford them. This is terribly sad.
(Veterinarian Org) – […] The largest percentage increase compared to 2020 prices is for a wet dog food product by PEDIGREE, which has increased by 207% compared to its 2020 price.
The largest dollar amount increase compared to 2020 prices is for a dry dog food product by Royal Canin, which is currently $43.99 more expensive per bag than it was in 2020.
In a recent Veterinarians.org survey of 1,000 U.S. pet owners, 50% of respondents indicated having to shop for cheaper alternatives to pet food as a result of rising costs. Pet owners also found themselves shopping for cheaper alternatives to pet treats (41%), pet toys (34%), and pet health supplements (28%).
55% of surveyed pet owners indicated having to cancel pet food subscriptions on Chewy.com, Amazon.com, or through a raw food/pre-cooked meal service as a result of rising costs.
22% of pet owners indicated having applied to special services in their state that help pet owners pay for pet-related costs, while 73% of pet owners felt a food pantry for pets would be helpful to them.
24% of pet owners indicated considering rehoming their pet or surrendering their pet to a shelter as a result of rising pet food/pet supply costs.
According to the American Pet Products Association, Americans spent $50 billion on pet food and snacks in 2021. (read more)
Pasta Prices Soar 20% in Italy – The Return of the Pasta Cartel?
Armstrong Economics Blog/Inflation Re-Posted May 16, 2023 by Martin Armstrong
(image above represents shrinkflation — an additional burden to consumers)
Italy’s Industry Minister Adolfo Urso called for an emergency meeting to discuss the sharp uptick in food prices. Pasta alone is up nearly 20%, and this is a major problem in a country where 60% of residents report eating this item daily. Some provinces are seeing a 58% increase in this staple item. Siena, Tuscany, reported pasta rising from $1.50 a kilo to $2.37 a kilo within in a year. The European Central Bank stated that inflation reached 8.1% in March, so what is driving these food prices?
Some may point to wheat, the main ingredient, as the recent usurping of farmland and the Ukraine war had an impact on prices. However, wheat prices have actually declined in recent months. Durum wheat is down 30% since May of last year. The only other ingredient required to make pasta is water.
Coldiretti, Italy’s biggest farmers association, said that farmers are not seeing an uptick in revenue and are struggling to make ends meet. “There is no justification for the increases other than pure speculation on the part of the large food groups who also want to supplement their budgets with extra profits,” Assoutenti president Furio Truzzi told the Washington Post. Yet, food manufacturers are claiming that this spike in pasta costs in temporary and a result of pasta produced during the beginning of the Ukraine war and energy crisis.
This is not the first time that Italy has seen a rise in food prices. Italian authorities raised 26 pasta manufacturers in 2009 and fined the industry 12.5 million euros for creating what Reuters described as a “pasta cartel.” Around 90% of pasta makers in the country were in on the price gouging scheme that operated from May 2006 until May 2008, during which pasta prices rose 51.8% for retailers and 26% for consumers. Barilla, the largest pasta producer at the time, received the largest fine of 5.7 million euros.
Food inflation is a major problem across the world. In Italy, overall food prices rose 12.6% in April 2023, marking a slight decline from March’s 13.2% reading. This is unsustainably high. The overall inflation numbers put forth by government agencies are always the best-case scenario as they do not want us to see the true damage of inflation.
Interview: The Real Rate of Inflation
Armstrong Economics Blog/Armstrong in the Media Re-Posted May 13, 2023 by Martin Armstrong
The Great De-Dollarization
Armstrong Economics Blog/USD $ Re-Posted Apr 23, 2023 by Martin Armstrong
All we hear is the same claims that the dollar is dead and it will be totally worthless any day now. Over the last few weeks, all we hear from the majority now is that the dollar is finished. Virtually every page you turn or site you visit claims the death of the dollar. They are calling this the de-dollarization of the world economy and that the future of the US dollar as well as the American empire itself is now collapsing. The general claim is that the group of economically-aligned nations known collectively as BRICS is a major threat to the greenback. That was the same story we heard about the Euro back in 1997.
As their scenario goes, the BRICS [Brazil, Russia, India, China, and South Africa] have moved to form an anti-dollar colation and Saudi Arabia is considering jumping on board. They insist that once that happens, the “petrodollar” will die and cease to be a reserve currency.
This is then followed by the forecast that the economy will suffer and that any bounce in exports will be short-lived simply because the dollar will be dead for the long term. Of course, this has been the favorite forecast that they keep putting out since Bretton Woods collapsed. They were wrong back then for the dollar rose between 1972 and 1976 against the British pound, with the collapse of Bretton Woods. To try to explain why the dollar did not collapse, that is when they claimed that the dollar was backed now by oil rather than gold. That was just an excuse as always to cover up their wrong forecast.
They sold that story to Newsweek and now the dollar rally was because of oil which replace gold. Suddenly the dollar became de facto backed by oil. They needed an explanation to explain why all the old theories were wrong. They sold this theory and it made the front cover of Newsweek. Everyone said YES! That must be the reason. OPEC priced oil in dollars! Naturally, everything was priced in dollars because, under the fixed exchange rate of Bretton Woods, everything from wheat and corn to copper and gold was all priced in dollars.
Now they are saying the American empire is threatened by the potential commercial real estate collapse and the BRICS anti-dollar venture. So they are forecasting a great depression-style crash is possible in the not-too-distant future. They spin this to forecast the end of the America Empire. The London FT, always anti-American/Pro WEF, reports that the dollar as a reserve currency has declined from 73% in 2001 to around 55% by 2021. Yet the FT did state an obvious fact:
“But if you are a reserve-rich central bank elsewhere that isn’t going to be a lot of comfort. Moreover, would you really feel more comfortable in, say, the renminbi? Even if it was fully convertible and liquid, would you honestly feel more sure that Beijing will behave lawfully than DC? The dollar still looks like the proverbial least dirty shirt in the closet.”
COVID actually has played a major role in shifting the world economy. In 2020, the US economy was 24.75% of the world’s GDP. By the start of 2022, it had fallen marginally to 24.15%. What these dollar-forecasting jockeys do not understand, is that if they were correct and the dollar collapsed, then the very BRICS would collapse even further. Economically speaking, when the United States gets a head cold, the rest of the world catches ammonia. You can’t have it both ways. The strength of the dollar is not gold or oil, it is the American consumer.
The risk to the entire world is runaway inflation thanks to Biden pouring untold amounts of money into the black hole known as Ukraine. The Neocons, who control Biden, are planning to launch a war against Russia and China before 2024. This will only continue to accelerate inflation. That reduces the spending power of the American consumer and in the process, the US economic growth declines in real terms and with it, the rest of the world plunges into recession.
While Macron has figured it out that the Neocons are in charge of US foreign policy and he is telling Europe to stop being the puppet of the USA, that all sounds nice but Europe is marching into war with Russia. NATO is firmly in control of the American Neocons and they need war or face losing power. With Trump in the lead, they must stop him at all costs for he is anti-war, would haul the Neocons out by the necks, and defund NATO, as well as stop the climate change agenda.
The US dollar in the global economy has been supported by the size and strength of the US consumer-based economy. Its stability and openness to trade and capital flows without restrictions and it has never been canceled, are the major foundation of the dollar in addition to strong property rights and the rule of law. That is why Russians and Chinese buy US property for they are secure in their ownership of US property which cannot always be guaranteed outside the US.
Consequently, the depth and liquidity of US financial markets remain unmatched. For institutions parking billions, the United States represents a large supply of extremely safe dollar-denominated assets. Are they really going to switch to China or buy debt from Brazil? Not a single institutional client will take that bait.
China has been divesting of dollar reserves because it KNOWS that the American Neocons want war. You do not fund your adversary who intends to wage war against you. China cannot shift reserve assets to Europe or Japan. They have been buying gold because it is geopolitically neutral territory. They are NOT buying gold as an investor thinking it will rally. That is irrelevant. If gold drops 25%, that does not translate into them becoming a seller.
The dollar in international reserves stood at 60+% at the start of 2022 against the US share of GDP at 24.25%. This comparison belittles the argument that the dollar is finished. Eventually, the US will lose the wars it is starting and the dollar will be replaced perhaps as soon as 2028. The IMF is already licking its lips and rubbing its hands together eager to get control of the reserve currency. But they too will collapse. We have a Directional Change next year and a Panic Cycle in 2025. So buckle up.!
Remember one thing, even with the debasement and collapse of the Roman Denarius between 260AD and 268AD, it still took 224 years for Rome to completely collapse. When war breaks out, capital flight will still be to the dollar. It will not be to public assets, but private. The United States is still supporting the entire world economy. The BRICS need the US consumer to keep their economies functioning. All this talk of the dollar being finished is really nonsense. That day will come, but when the US consumer no longer buys.
Remember 1997? The Euro was going to dethrone the dollar. They claimed the new EU will be a bigger economy than the US. The problem was, they lacked a consumer economy, and low taxes, and they routinely canceled their currency to force people to pay taxes. It is always the same story over and over again.
The Banking Crisis is Global – Not Confined to the USA
Armstrong Economics Blog/Banking Crisis Re-Posted Mar 12, 2023 by Martin Armstrong
The Biden Administration is responding to the panic phone calls that their Marxist philosophy will bring down the entire financial system. My ear is red as can be. I have had enough of the phone calls today to last the balance of the month. Trying just to do the right thing! Three banks have effectively gone down in the week of March 6th, which our computer was targeting. There have been Silicon Vally Bank, Signature Bank, and Silvergat Bank.
The Regulators perhaps saw the handwriting on the wall. This NO BAILOUT claiming that no taxpayer money will be used for a bailout of their hated rich, how about just using the taxpayer’s money you are throwing down the train in Ukraine? Depositors in Signature and SVB they are now saying would be made whole. If they do not cover ALL deposits, the monumental banking failure will be catastrophic.
Our forecast for a Banking Crisis is by NO MEANS confined to the United States. It will be far worse in Europe. We can see our computer not only targeted 2023 for a key turning point with a Directional Change but a Panic Cycle next year in bank stocks, but interest rates will be rising higher as also the risk of banks and governments escalated especially when they insist on waging war against Russia.
The yield curve is critical and we must understand that this insane war against Russia, even economically, will be a major financial disaster not much different from Vietnam which brought down Bretton Woods and forced Nixon to close the gold window on August 15th, 1971. It was that unrestrained spending directed by the Neocons. Then too, it was all about Russia they assumed was behind Vietnam.
Once more, the reckless spending on war promoted by the Neocons is undermining the entire economy. They have lost every war they have promoted – Vietnam, Afghanistan, Iraq, proposed Syria, Libya regime change, and now Ukraine. These people are never held accountable for all the devastation and the lives lost.
War is the primary driver of inflation and the central banks will not even address it for they do not want to “criticize” the Neocons. They might wake up with their dog’s head in the bed as in the Godfather. The central banks will NOT be able to contain this inflation or ever reach their 2% target regardless if the economy turns down just as what happened during Vietnam.
This is a warning to all small banks. Understand the REAL trend or you will NOT survive. Major capital is fleeing the long-term and rising into the short-term because they see rates are rising and any long-term bond investment during a period of war is going to be a major losing trade. Do not get trapped by the yield curve and understand that this trend is in play into 2025.
This Banking Crisis has been caused by Governments who artificially kept interest rates too low since 2008 and in the process, this banking crisis is unfolding because too many banks are UNSOPHISTICATED in forecasting and have been listening to the talking heads on TV and the desperate hope that inflation will decline while ignoring Ukraine entirely. Get that wrong – and you will NOT survive.
I strongly urge small banks to take our business services for access to real forecasting that is not biased or tarnished by human opinion with the two most dangerous words in forecasting:
Interest Rates & the Fed
Armstrong Economics Blog/Interest Rates Re-Posted Feb 2, 2023 by Martin Armstrong
The Federal Reserve raised the benchmark by 25 bps, as expected. The Fed fully understands that the manipulation of the CPI is a necessary aspect both for containing government benefits and understating inflation also results in high tax revenues. The market loves hope, and as a result, they focused on the warning that we’ll be in restrictive territory for just a bit longer. Most still believe that there will be a slowdown in inflation just ahead.
The Fed’s cautionary commentary saying that the “disinflation process” has started triggered shares to jump ending up 1%. This shows how insane the analysis had become that they cheer a recession and think that lower interest rates are bullish for the stock market. Obviously, they just listen to the talking heads on TV and have never bothered to look at reality. When interest rates decline, so has the stock market. Interest rates rose for the entire Trump Rally, and they crashed during the Great Recession of 2007-2009. For the life of me, I just shake my head when the talking heads cheer lower rates and spread doom and gloom with higher rates.
The World Economic Forum Sends an Eerie Warning to Elon Musk | Direct Message | Rubin Report
The Rubin Report Published originally on Rumble on January 3, 2023
Dave Rubin of “The Rubin Report” talks about Klaus Schwab’s World Economic Forum sending a creepy warning to Elon Musk about his running of Twitter; the arrest of Andrew Tate for human trafficking in Romania and his Twitter war with Greta Thunberg; and Bill Gates revealing his plan for how ESG scores will be used to control corporations all over the world in the name of fighting climate change and ending the use of fossil fuels. Dave also does a special “ask me anything” question-and-answer session on a wide-ranging host of topics, answering questions from the Rubin Report Locals community.
2022 Inflation is Final – 32% for the year
Armstrong Economics Blog/Economics Re-Posted Jan 2, 2023 by Martin Armstrong
Our Independent Inflation model has calculated that the combined rate for everything from food to transportation came in at 32% for 2022. That is a far cry from the official number. This is simply calculated by Socrates from an unbiased perspective. Thank you, COVID & the Russian Sanctions. What a new wonderful world the Biden Administration has created.