• If you are having problems logging in please use the Contact Us in the lower right hand corner of the forum page for assistance.

Ranchers.net

Stagflation Exploding — Big Rate Cuts Soon
John Browne- MoneyNews

Evidence is mounting fast that we are now entering a period of economic recession and mounting financial inflation at the same time.

Indeed, the latest annualized headline inflation is now running at 2.8 percent or, annualized, at a whopping 9.5 percent and still “politically cooked” to the downside.

Worse still, the producer price index for finished consumer goods (to be passed on either as higher consumer costs or reduced corporate profits) is now rising at some 9.3 percent.

you annualize that figure, just as all the Wall Street “cheerleaders” have recently done for jobs, retail sales and GDP growth, PPI inflation is running at a staggering 47.5 percent!

Talk about exploding. At that rate, gold could potentially go to over $3,000 an ounce!

So, it appears that the stagflation I have warned of all year is now upon us — and growing — big time!


-----------------------------

Our Fed is now frozen in the box while our economy burns.

In military terms, it is like failing to deal with a divided enemy piecemeal. We now face simultaneous attacks on all fronts—not good!

-----------------------------------

Most of us who live in the real world of Main Street, eating food and using gasoline, heating oil and electricity, know that our “true” personal inflation is way, way above the official rate of just 2 percent.

We have termed this officially concealed inflation stealth inflation. I believe our Fed has long been aware of it, but was also aware than our economy has been in contraction for many months.

The Fed was therefore afraid to act for fear of causing an economic downturn.

--------------------------------

Our Fed is now in a corner facing the gigantic problems of inflation and a subprime dollar calling for higher rates and the prospect of deep recession, calling for steeply lower rates.

The Fed’s problem is now so big that it is no longer merely a financial or even an economic problem. It is a growing political problem, because both rampant inflation and deep recession can cause social unrest and trouble on the streets.

Following the 1929 stock market crash, paper money lost credibility and interest rates were kept too high for too long. This morphed the recession into the Great Depression of 1931, which lasted over 10 years.

At least some top politicians and central bankers (like Bernanke) will be painfully aware of this history.

My guess therefore, is that in the gigantic mental and political struggle that lies ahead, the conquest of recession will emerge supreme and central bank rates will be cut big time throughout most of the world.

Let us hope that the central bankers coordinate their efforts and avoid the morale damaging spate of competitive devaluations that occurred between 1929 and 1931, and that our U.S. dollar is saved from collapse, in the interests of world trade and political stability.

To achieve this, our Fed must come out of their corner fighting!
Top