This article was originally published by Brandon Smith at Birch Gold Group.
I don’t think I can overstate the danger that the U.S. economy is in right now as we enter 2022. While most people are caught up in the ongoing drama of Covid-19, a REAL threat looms over the nation in the form of a stagflationary tidal wave. The mainstream media is attempting to place the blame on “supply chain disruptions,” but this is a misrepresentation of the issue.
The two factors are indeed intertwined, but the reality is that inflation is the cause of supply chain disruptions, not the result of supply chain disruptions. If we look at the underlying stats for price rises in essential products we can get a clearer picture.
Before I get into my argument, I really want to stress that this is a precarious time and I suggest that people prepare accordingly. In just the past few months I have seen personal expenses rise at least 20% overall, and I’m sure it’s the same or worse for most of you. Stocking necessities and safe-haven investments with intrinsic value like physical precious metals are a good choice for protecting whatever buying power your dollars have left…
Higher prices everywhere
The Consumer Price Index (CPI) is officially at the highest level in 40 years. CPI measurements often diminish the scale of the problem because they do not include things like food, energy, and housing which are core expenses for the public. CPI calculations have also been “adjusted” over the past few decades by the government to express a more positive view on inflation. If we look at the inflation numbers at Shadowstats, calculated according to the same methods they used in the 1980s, we see a dramatic increase in CPI which paints a more dire (but more accurate) picture.
U.S. food prices have spiked to levels not seen since 2008 at the onset of the credit and derivatives collapse that brought about tens of trillions of dollars in Federal Reserve bailouts.
If we look beyond the 2008 crisis, food costs do not see a similar jump until the 1980s. Rising food prices in the US are often obscured by creative accounting and “shrinkflation” (shrinking packages and rising prices), but if we look at global food prices the average is a 30% jump in the past year.
Rental and home prices have also gone into the stratosphere. Rental costs went up around 18% in 2021, and this is an extension of a trend that has been prevalent for the past decade. Prices have been rising for a while, it’s just that now the avalanche has accelerated.
Home prices are currently out of the range of most new potential home buyers. Values jumped 16% in the past year alone, with the average property costing $408,000. Home sales continue to remain elevated compared to two years ago despite inflating prices for one reason and one reason only – the mass migration of Americans away from the draconian mandates and bureaucracy of blue states into more conservative states.
I live in Montana, a primary destination for people relocating, and from my experience, the majority of these people are conservatives seeking to escape the vaccine and lockdown mandates in places like California, New York, and Illinois. They see the writing on the wall and they are trying to get ahead of the economic and social calamity that will surely befall such states.
I would also note that home sales have finally begun to flatten in the past six months but prices are not dropping, which is a trend that I think needs to be explored further because it illustrates the larger issue of stagflation.
When inflation becomes stagflation
Understand that prices are not just rising because of increased demand (demand is starting to fall in many sectors), prices are rising because of increased money supply and dollar devaluation which is not yet being reflected in the Dollar Index.
Take a look at U.S. GDP and you will see that for the past several years it has tracked in tandem with price inflation. Obviously, if prices inflate then this means people are spending more, which then leads to higher U.S. GDP; it’s like magic, right? In other words, inflation makes it seem as though U.S. GDP is always improving.
However, this has not been the case in the past couple of years.
Official GDP has flattened despite the fact that U.S. money supply and inflation have rocketed higher. What does this mean? I believe it is a sign of stagflation and a reckoning in 2022. If we examine inflation adjusted GDP numbers from Shadowstats we see that GDP has declined rather aggressively in the past couple of years.
We can also see odd tendencies in oil and gasoline prices. While it’s true that gas prices have been higher in the past, this does not address the full context of the situation. U.S. travel spending has declined 12% since 2019 and airline travel has dropped at least 21% in the past year. Average gasoline usage dropped after 2019 and still has not recovered. Yet, gas prices continue to rise? In other words, travel demand is stagnant but prices are INCREASING – this is another signal of inflationary pressures and dollar devaluation. Oil is priced in dollars globally, and therefore any inflation in the dollar will be readily visible in oil. This would help explain why pandemic paranoia and reduced travel have not caused gas prices to drop.
If the current momentum continues the majority of necessities in the U.S. will not be affordable for most people by next year. We are looking at a fast-moving decline in production along with a swift explosion in prices. In other words, a stagflationary disaster.
This is the Federal Reserve’s fault
I and many other alternative economists have been warning about the inevitable inflation/stagflation crisis for years, but the most important factor to understand is WHO is responsible this event?
The mainstream financial media is going to protect the government and the Federal Reserve at all costs during this breakdown. They are going to blame Covid, the lockdowns here and overseas as well as the supply chain bottleneck.
The Fed is the true culprit, though.
While there have been many American Presidents and other politicians that have supported the Fed in its inflationary activities, the central bank itself needs to be held accountable for the downturn that is about to occur. This is a process that started back at the founding of the Fed, but spread like cancer after the crash of 2008 and the introduction of 12+ years of stimulus and bailout measures along with near-zero interest rates.
The inflationary end-game
The pandemic is the perfect cover for the inflationary end game. In 2008 the response to the crisis was to print and pump dollars into banks and corporations in the U.S. and around the globe. This money supply was held in corporate coffers and in central banks overseas, which slowed the effects of inflation. This set the precedent for subversive stimulus policies by giving the Fed a blank check to do whatever it wanted.
In 2020, the Fed created trillions more but this time the money was injected directly into the U.S. economy through Covid stimulus checks, PPP loans, and other measures. In the alternative economic field, we call this “helicopter money.” These dollars triggered a massive retail buying spree in 2020, but with more dollars in the economy chasing less goods prices are now spiking much higher.
The big discussion today is whether or not the Fed will taper their asset purchases, reduce their balance sheet and raise interest rates to counter inflation?
The fact is it won’t matter; inflation/stagflation will continue or even accelerate as the Fed tapers. With a taper comes the threat of a flattening yield curve in Treasury bonds as well as the danger of bonds and dollars being dumped by foreign investors and central banks. If the trillions upon trillions of dollars being held overseas come flooding back into the U.S., inflation will continue at its current pace or erupt even higher. In fact, the world’s ownership of dollars reached a 26-year low recently. The global transition away from the dollar, toward inflation-resistant investments, has already begun.
This is not a policy error
I explained this Catch-22 threat in my recent article The Fed’s Catch-22 Taper Is a Weapon, Not a Policy Error. In that essay, I outline the Fed’s documented history of creating economic disasters that conveniently end up benefiting their friends in the international banks.
I also explained (with evidence) how the Federal Reserve actually takes its marching orders from the Bank for International Settlements, a globalist institution which along with the International Monetary Fund and World Economic Forum is openly seeking a one-world economic system and one-world currency system.
I do not believe that the Fed’s actions are a product of ignorance or stupidity or basic greed. I do not believe the Fed is scrambling to keep the U.S. economy afloat. I believe according to the evidence that the Fed knows exactly what it is doing. The pandemic offers a perfect scapegoat for an engineered crash of the U.S. economy which the Fed is trying to facilitate.
Why? Because the more desperate people are financially, the easier they are to buy off with false promises and a loaf of bread. They are easier to control. On top of that, with the U.S. economy reduced to second- or third-world status, it is easier to sell the public on the predetermined solution – total global centralization and far less freedom.
As the stagflationary crash plays out, never forget who was really the cause of the public’s suffering. In the fog of national crisis, it is easy for the establishment to shift blame and responsibility and to cloud the truth. The inflation calamity is about to get much worse, and as it does we need to rally newly awakened people to take action against the central bankers and globalists behind it.
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Looks like Imma connect a couple more solar panels up to the grid tie system. And I need to get my butt in gear and make a roadtrip to get more. I figure in a month or two I can sell them for damm near retail price. Outback charge controllers have gone up 100 bux. I still have 4 grid tie microinverters I got for free and a couple of 250 watt panels so I can offset my power some. I didn’t want to buy a bunch of panels yet because this is a bad time of year to resell them dammit. Eh well, ya gotta do what ya gotta do. When trade with China comes to a halt, solar panels and equipment will double in price. A good investment if you want a place to park some cash.
Brandon is right on this one. the Feds keep pumping money into the market as a plan for the Globalists to crash the dollar and destroy the economy, so the Big banks and Globalists will take everything, including your mortgaged house and car loans you cannot pay for in worthless dollars…you will be put out and desperate, and this coming soon.
You will own nothing and be happy? Ya think?
With all the money being pumped into the system everybody is making more money to cover the inflation it causes so there really isn’t any relative change in cost of living.
Incorrect. If you look at whatever wages and wage increases have occurred, they don’t come close to keeping up with increase of cost of living.
Then the government should issue inflation relief payments to the public, the same way they did with the covid relief money they gave us.
After the 1970’s wages remained stagnant for the better part of 30 years while cost of living continued to skyrocket.
At this point the only way wages can catch up to cost of living is by scaling back the cost of living to what it was in the early 80’s and keeping it right there for at least one generation or 20 years.
We all know that’s not happening.
Aaaand the robinhooders think they’re ballin because their AMC is up. Ballin soooo hard, while simultaneously not noticing the 4 bucks paid for a gallon of gas and 8 bucks wasted on a loaf of bread.
Yeah, you’re ballin, alrighty.
DJI slumps 14% from November highs and the useless ossified robinhood idiots keep pumping leveraged funds into the casino like it will keep going on to 50,000.
Been coming here since Obama days… nice to see a tidy summary and obvious effect coming to a theater near you. Prepping should have been started along time ago… this article is pretty.much the writing on the wall examples..
Already got my bug out joint.. and amazed at all the average people wanting campers and country property.. yeah. It’s line reading the weather now u can see it coming on the horizon..
Peace & prejudice.
Campers and country property, the place where the unprepared can easily find all they need left by those who no longer need them.
I am always amazed at the crazy-high food prices in Canada. Grocery store food is overpriced, delivery food is really overpriced and restaurants, if they let you in, come with epic bills (you pay 20 to 35% on the bill for tax, tip).
Many millions don’t even bother and instead rely on food banks. Food banks tend to give out very unhealthy, processed foods. People are consuming food with large amounts of salt and sugar.
A couple things this “alternative economist” gets wrong. The world needs MORE dollars not less. The global monetary system is based on debt and the FRN is the reserve currency and it’s banking system is the creator of this debt.
Growth is actually growth of debt since all “money” is created at the point of the loan with interest attached. In order to pay all this dollar denominated growing debt back, plus interest, the amount of FRNs must constantly increase.
The Fed is not trying to crash the system, as Mr. Smith has claimed for the last ten years. If they were actually trying, they would have accomplished that goal by now. No, they are trying to prolong their gravy train for as long as possible. They don’t care whether people can afford to buy anything or not…other than the class of people they represent…and you are not part of that club.
People forget that the Great Depression was the result of the Fed contracting the money supply to defend the dollar, and that was when our money was (theoretically) gold and silver backed to constrain such actions but credit was used to expand it anyway through fractional reserve banking.
The ’29 crash really didn’t have much to do with it as a base cause even though that’s what most people attribute to it.
Just to add to your comment.
There is even less to constrain credit/money creation today. The interest rate is very low. A couple years ago the Fed eliminated the reserve requirement for the banks, so there is absolutely nothing to control the amount of debt created. There are no longer any fractional reserve requirements. I believe this is why the banks don’t offer any products where you can make a good return on deposits. They no longer want your deposit. It is entered in their books as a liability for them they don’t need.
JRS
Thanks for this info. I knew they continuously lowered it but did not know that it had been dropped.
“Fed eliminated the reserve requirement for the banks”
They eliminated it Dec 2020, so only a little over a year. It was to provide liquidity (loans) because of the covid downturn. They also said they have no plans to reinstate the reserve requirement anytime soon.
Another thing that requires the constant expansion of dollars is what is known as the Eurodollar banking system (it has nothing to do with Euros). Check that one out. It involves foreign banks (mostly Square Mile based) creating their own dollars. They are mostly used for exotic products and derivatives that the US Fed has no control over. When they tie up dollars in these things it creates a global shortage of dollars needed to pay back foreign dollar debt and buy commodities like oil.
This is one reason the Federal Reserve has dropped the M3 data and now the M2 is being dropped. Why? Because the Fed has no idea of the size of the money supply anymore. The foreign supply (Eurodollars) dwarfs the domestic supply. It is out of control, it appears. All the Fed will do when a liquidity crisis rears it’s head again will be to push more dollars into the system to keep it going.
Bullets Beans and Bullion will always hold value in a collapse. Gets some! Stack the shiny and forget about it! You could buy a house in Weimar Germany for a couple ounces of gold! The money of kings has survived every economic civilizational collapse in written history.
We had a couple of appliances break; things don’t last like they used to. The prices for replacement are ultra high and the supply chain has reduced choices with significant time from ordering to delivery; potentially months. We live in Florida the land of “garage sales”. Many older people pass away and their kids sell everything but (and sometimes including) the kitchen sink. If you see an appliance that has running time left in it at a bargain price buy the replacement now and store it; you’ll be thankful later.
Helicopter Money (Quantitative Easing) and the Federal Reserve (which is neither) – so what could possibly go wrong? Many of this nation’s FOUNDERS were adamantly against any entity outside of American control “coining” our money. Oh, you say, the Federal Reserve is under American control – sorry Charlie, have you seen the disdain with which they answer questions by congress?
Kind of like the United Nothings located in New York City. American taxpayers had the pleasure of paying the Lions’ share of their bills for many decades, diplomatic immunity has allowed many of their representatives to violate our laws, and generally the forum votes against USA interests.
Its impossible to predict what the economic future will be till Omicron finishes its sweep in a few weeks’ time.
Asking people to prepare is all well and good, but its been too late to prepare for some time.
Either you were or you weren’t.