Tuesday , 19 September 2017


Ignore the Hype: Inflation Is NOT That High – Anywhere!

There is very little evidence of high inflation at present, despite what theinflation hyperinflationists say, and a little bit of common sense totally debunks the idea that there is.

So says Cullen Roche (pragcap.com) in edited excerpts from his original articles* entitled Inflation Is Not High and Global Inflation – Where You At?

[The following article is presented by  Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and the FREE Market Intelligence Report newsletter (sample here – register here) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]

Roche goes on to say in further edited (and in some places paraphrased) excerpts:

U.S. Inflation

First, let’s just glance at a few of the independent inflation gauges [for the inflation situation in the U.S.]:

1. The Billion Prices Project

The Billion Prices Project is actually showing inflation a bit higher than the BLS. Inflationists aren’t satisfied with the BPP because they say it only shows online prices and doesn’t account for other factors.

bpp-400x314

2. ECRI Future Inflation Gauge

So what about the ECRI, another independent view?  Again, similar story  – their Future Inflation Gauge is showing just a 1.8% rise in prices:

ecri-400x256

3. The 10-year Break-even Rate

Not satisfied? Okay, what about a market gauge?  If we look at the 10-year break-even rate we see a similar story. The 10-year break-even is at just 2.26%:

10_year-400x240

Other Data Points to Consider

Still not satisfied?  How about some common sense.

If the CPI is much higher than the BLS says at 1.8% then that means real GDP is that much lower so, for instance, if the CPI is REALLY at 5% as ShadowStats claims, then that means real GDP  is -2% and it basically means the economy has been contracting for the  entirety of the last 5 years.  Does that make any sense at all?

If you believe the above then it also means that all of the following data points are wrong:

  1. ISM Manufacturing at 55 (growing).
  2. ISM Services at 56 (growing).
  3. Markit PMI at 53.2 (growing).
  4. Non-farm payrolls at 160K (growing).
  5. ADP Private payrolls at 200K (growing).
  6. Industrial Production at 99.05 – just shy of its highest reading since  2008.

There are plenty of other indicators showing similar trends.  The point is, many of these indicators are privately issued and clearly showing consistent expansion.

Conclusion

If you believe that the rate of inflation is higher than the BLS reports then it must mean that:

  • the government is not only lying about the CPI, but they must also be lying about nominal GDP or
  • all of these private companies are in collusion with the government to make it  appear as though the U.S. economy is growing when it’s not.

It’s fine if you believe that, but don’t expect anyone to take you seriously.

Global Inflation**

Below is a good chart putting the global inflation story into perspective.  In short, there just doesn’t appear to be much inflation anywhere.   For all the worry about rising interest rates and the end to tapering,  this bigger picture story doesn’t say that much has changed at all.   Inflation, much like the muddling global economy, has been essentially flat for the last few years:

inflation-400x251

[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]

*http://pragcap.com/inflation-is-not-high; **http://pragcap.com/global-inflation-where-you-at (Copyright © 2013 All Rights Reserved)

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