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PostIs Inflation Finally Here? (Tor Guimaraes, USA, 05/09/21 3:50 am)
While the US and most world media continue their attempts at demonizing the latest enemy of the establishment and feverishly argue over the color of the pimples on the Aardvark's ass, one of the economy's most deadly enemies, inflation, is beginning to lose its camouflage. An inordinate percentage of the first quarter corporate earnings reports are bringing the dirty word out in many sectors, including consumer and industrial companies, with some of the biggest likely price jumps in transportation, materials and labor outlays.
Temporarily relieved from the Covid threat by Biden's successful vaccination program (thank God), consumers have increased demand and have made corporate earnings look relatively very good. However, if inflation is allowed to play out, the impact on future earnings is likely to be quite negative. On the other hand, if the Fed raises rates, the stock market will crash and become more reflective of the real economy. One way or the other, it will be quite a soap opera for the average American people. I can't help but wonder what kind of nonsense Mr. Trump would have come up with to explain the situation in another year, if he had been able to steal the election from Biden?
Meanwhile, the Chinese, Russians, Iranians, Venezuelans, etc. continue to promote any ways that can free them and their trading partners from using the US dollar. It does make me green with envy to think that, as I said before, China despite all her blemishes, is now having another Golden Age after what they call 100+ years of humiliation in the hands of the Western powers.
The American government, Republicans and Democrats, must get our marbles together to better understand our own situation, the dynamic forces at work, our areas of weakness and remaining strengths, to redeploy our resources and hopefully turn our dire situation around. We will not succeed playing a zero-sum game, and the sooner we get going the less our situation increasingly becomes desperate and irretrievable. We need to wake up!
JE comments: The basic concepts of Economics 101 (I got a C+ as a Junior at Dartmouth!) point to a wave of inflation--increased money supply, extremely low interest rates, and recovery after a catastrophic event. The indices have not reflected this so far, although experience suggests otherwise. Been to the supermarket lately? Have you pumped some gas? Even worse, who has purchased building supplies in the last few months?
We tend to assume we're more fortunate or smarter than Weimar Germany, yet the laws of the Dismal Science are, well, laws. Why shouldn't our economic chickens come home to roost?