So says Michael Lombardi (ProfitConfidential.com) in edited excerpts from his original article* entitled No Inflation? Why Breakfast Prices Are Going Up?
The following article is presented by Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and the FREE Market Intelligence Report newsletter (sample here; register here) and has 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.
Lombardi goes on to say in further edited excerpts:
Aside from food, gasoline prices are also moving higher. As the chart below shows, since November, gasoline prices have gone up 20%. Higher gas prices means it costs more to deliver goods to the end user [which is] a signal that goods in general could be rising in price.
Effect on Buying Power
As inflation continues to rise, it will kill the buying power of the average American Joe because incomes in the U.S. economy are not keeping up with inflation. Rising inflation puts severe pressure on disposable income as more buys less. That means the saving rate will go down. It’s the spiral effect: the more inflation rises, the more severe the problems.
If anyone ever thought the Federal Reserve could print $4.0 trillion out of thin air and inflation would not be a problem, they obviously never studied the history of economics. Every economy in the world that has printed mass amounts of its money (and none have printed more than the U.S.) has encountered inflation as a consequence of money printing. The U.S. will be no different.
Don’t listen to what the official numbers say. Inflation is a big problem already for the U.S. economy – and in an inflationary environment, gold bullion goes up and stock prices go down, because materials cost more and consumers spend less.
I’d adjust my portfolio accordingly for the rapid inflation that awaits us.
[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.]
History clearly shows there is a direct link between inflation and gold demand. When inflation jumps, or even when inflation expectations rise, investors turn to gold in greater numbers. When gold demand rises, so does its price and you can guess what happens to gold stocks. Below is a look at the extent of consumer purchases after inflation (and in some cases hyperinflation) took off in a number of countries. Read More »
The March year-over-year inflation rate was 1.51%, which is well below the 3.88% average since the end of the Second World War and 37% below its 10-year moving average. Read More »
On the surface, policy settings around the world look very inflationary with large fiscal deficits and aggressively easy monetary policies yet it is hard to see inflation gaining any traction [with] global activity so weak and the monetary transmission process so impaired in many countries. There is more of a deflationary than inflationary tone to the economic environment and it does not look as if this will change any time soon.
The public’s estimates and predictions of inflation are significantly, and systematically, related to the demographic characteristics of the respondents…[and] even after we hold constant income, age, education, race, and marital status…women in our survey tended to think inflation was 1.9 percentage points higher than men. [There are more interesting findings, so read on.] Words: 987
Many investors are treating inflation as a certainty because the Fed has expanded its balance sheet to unheard of levels through its quantitative easing strategy. Some have even gone so far as to say that this program will utterly destroy the U.S. currency. To demystify this conclusion, I’m going to explain quantitative easing and why the Fed is using this monetary strategy. Afterward, I’ll explain why gold is still positioned to rise even if inflation continues to be low. Words: 786
If inflation starts to head towards 5%, you can be sure it’s headed for 10% because they don’t have the ability to stop it now. The only antidote they have to the mess we are in, which is massively excessive debt reinforced by derivatives, is unlimited money printing. The idea that you can withdraw the punch bowl or sharply raise interest rates, it just doesn’t exist, unless you want to take a complete deflationary collapse.
James Turk believes hyperinflation is ahead. Bob Prechter believes massive deflation is coming. An interesting discussion between the two takes place in this audio. Ultimately, both lead to Depression. Only the route taken differs, but that is important.
Whether our current economic crisis will end with massive inflation or in a deflationary spiral (ultimately, either one results in a Depression) is more than an academic one. It is the single most important variable for near and intermediate term investing success. It is also important in regard to taking actions which can prepare and protect you and your family. [Here is my assessment of what the future outcome will likely be and why.] Words: 1441
The developed economies of the world have opened the money spigots…[and this] massive money and credit creation is sitting in the banking system like dry tinder just waiting for a spark to set it ablaze. How quickly it happens is anyone’s guess, but once it does we are likely to be enveloped in a worldwide inflation unlike anything before ever witnessed. [Let me explain further.] Words: 625
People get confused about the nature of mass inflation, hyperinflation, and what causes both. [Let me clarify the nature and causes of each.] Words: 930