The Fed’s Inflation “Goals” Are About to Come Back to Bite It

The financial media is finally catching on to something we’ve been screaming about for years…

That the Fed’s preferred metric for measuring inflation is a complete joke.

Making matters more difficult, the Fed’s preferred inflation gauge does a pitiful job of capturing the quandary facing many households that live paycheck to paycheck. The so-called core PCE is the central bank’s go-to inflation metric. It is derived by netting out the necessities of food and energy from personal consumption expenditures. But the core PCE also minimizes the weight of rent and over-emphasizes health care due to Medicaid and Medicare’s inputs.

Source: Bloomberg

What the article doesn’t understand is that this scheme is intentional.

The reality is that since the US abandoned the Gold Standard in 1971, the Fed has effectively been “papering over” declining living standards in that the actual “cost of living” in the US has soared relative to real incomes.

This fact stares all of us in the face every day. Back in the late ‘60s / early ‘70s, one parent worked and most Americans had a decent quality of life. Today both parents typically work and are one financial emergency away from being broke.

The Fed masks this by understating inflation and by providing an endless stream of easy credit/ debt. This is why the Fed’s continuous “gosh, inflation is just too low… we better keep on printing money forever,” shtick is so ridiculous.

However, like the famous Frankenstein monster, the Fed’s inflationary policies are about to turn on their master.

The fact is that inflation is actually clocking in well over 3%. And it’s about to blow up the Everything Bubble.

Bonds trade based on inflation.

If inflation rises, so do bond yields.

When bond yields Rise, bond prices FALL.

And when bond prices FALL, the massive debt bubble begins to burst.

On that note, the yield on the most important bond in the world: the 10-Year Treasury, has already broken above its 20-year trendline.

GPC11818

The US is not alone… the yield on 10-Year German Bunds has also broken its downtrend.

GPC118182

Even Japan’s sovereign bonds are coming into the “inflationary” crosshairs with yields on the 10-Year Japanese Government Bond just beginning to break about their long-term downtrend.

GPC118183

Globally the world has added over $60 trillion in debt since 2007… and all of this was based on interested rates that were close to or even below ZERO.

All of this is at risk of blowing up courtesy of this spike inflation. And it’s going to collapse most asset classes in ways we haven’t seen since 2008.

On that note, we are putting together an Executive Summary outlining all of these issues as well as what’s in terms of Fed Policy when The Everything Bubble bursts.

It will be available exclusively to our clients. If you’d like to have a copy delivered to your inbox when it’s completed, you can join the wait-list here:

https://phoenixcapitalmarketing.com/TEB.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Disclaimer: The information contained on this website is for marketing purposes only. Nothing contained in this website is intended to be, nor shall it be construed as, investment advice by Phoenix Capital Research or any of its affiliates, nor is it to be relied upon in making any investment or other decision. Neither the information nor any opinion expressed on this website constitutes and offer to buy or sell any security or instrument or participate in any particular trading strategy. The information in the newsletter is not a complete description of the securities, markets or developments discussed. Information and opinions regarding individual securities do not mean that a security is recommended or suitable for a particular investor. Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment. 

Opinions and estimates expressed on this website constitute Phoenix Capital Research's judgment as of the date appearing on the opinion or estimate and are subject to change without notice. This information may not reflect events occurring after the date or time of publication. Phoenix Capital Research is not obligated to continue to offer information or opinions regarding any security, instrument or service. 

Information has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. Phoenix Capital Research and its officers, directors, employees, agents and/or affiliates may have executed, or may in the future execute, transactions in any of the securities or derivatives of any securities discussed on this email. 

Past performance is not necessarily a guide to future performance and is no guarantee of future results. Securities products are not FDIC insured, are not guaranteed by any bank and involve investment risk, including possible loss of entire value. Phoenix Capital Research, OmniSans Publishing LLC and Graham Summers shall not be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided. 

Phoenix Capital Research is not responsible for the content of other websites or emails to which this one may be linked and reserves the right to remove such links. OmniSans Publishing LLC and the Phoenix Capital Research Logo are registered trademarks of Phoenix Capital Research. Phoenix Capital Management, Inc.
What Happens When the Everything Bubble Bursts?
  • By trying to corner the bond market (risk-free rate)
  • the Fed has created a bubble in everything
  • We call this THE EVERYTHING BUBBLE
  • Reserve your copy of our Executive Summary
  • To prepare for what's coming down the pike!