inflation keeps climbing ...
There had been several columns and news items recently "explaining" how inflation had already peaked, which was fueling optimism in stock & bond markets, but, nope, inflation hit another 40-year high in May -- 8.6% -- and this morning the average gasoline price in the US passed $5/gallon for the first time -- and so far the predicted inflation rate for June is the same 8.6% --
I can't predict how high inflation will go, or for how long, all I can say is that the major central banks -- EU, UK, US, Japan -- are all keeping overnight interest rates at 1% or below despite the highest inflation since the early 1980s -- and these interest rates will have to go much much higher before prices stop rising at this pace.
In 1981 the UK overnight rate was 14%, in Japan 9%, in the US 19%, in Germany 9% (the EU didn't exist yet) -- all I can say is WTF why are interest rates still so low?
And the answer is easy --> it's the property values, higher interest rates will mean stocks, bonds, and real estate values crash --> all we care about are our precious property values, but the people will not put up with 8% inflation, they will vote out whomever until inflation goes back down.
It's why Biden is the least popular President at this point in his first term of every post-WW2 President except Ford -- in December 1975, when inflation was 7.1%.
You've got to increase interest rates, increase federal taxes, and cut federal spending, that's the only way out of this.
I can't predict how high inflation will go, or for how long, all I can say is that the major central banks -- EU, UK, US, Japan -- are all keeping overnight interest rates at 1% or below despite the highest inflation since the early 1980s -- and these interest rates will have to go much much higher before prices stop rising at this pace.
In 1981 the UK overnight rate was 14%, in Japan 9%, in the US 19%, in Germany 9% (the EU didn't exist yet) -- all I can say is WTF why are interest rates still so low?
And the answer is easy --> it's the property values, higher interest rates will mean stocks, bonds, and real estate values crash --> all we care about are our precious property values, but the people will not put up with 8% inflation, they will vote out whomever until inflation goes back down.
It's why Biden is the least popular President at this point in his first term of every post-WW2 President except Ford -- in December 1975, when inflation was 7.1%.
You've got to increase interest rates, increase federal taxes, and cut federal spending, that's the only way out of this.