I’ve been warning for weeks and weeks now that inflation was going to be a major problem for the financial system.
Yesterday we finally got a taste of it. The official inflation measure for the U.S., the Consumer Price Index (CPI), skyrocketed to 4.2% year over year. Core CPI, which is the most essential component, recorded a year over year jump of 3%.
That doesn’t sound much, but you need to consider the ENTIRE reason that CPI exists is so the government can DOWN-play inflation. There are endless gimmicks used to massage this number as low as possible.
For instance, the CPI…
- Doesn’t include food or energy inflation, despite the fact those are two of the most necessary goods for consumers to survive.
- Weighs the cost of goods and services geometrically instead of by their actual price.
- Uses substitution or replaces items that it measures if they become too expensive.
Bottomline, the CPI is designed to HIDE inflation. And despite all of the gimmicks and games played by the government, the official inflation number still clocked in at 3%.
This is the highest core CPI since 1982.
To put that into perspective, at that time interest rates were at 19% as the Fed was desperately trying to control inflation.
This time around, the Fed has rates at ZERO while printing $125 billion in new money per month.
To make things even worse, the Fed is in complete denial that inflation even exists. Various Fed officials surfaced yesterday to argue that the spike in inflation is transitory i.e. the Fed doesn’t need to do anything about it.
The White House is also in denial about this problem, claiming that if “base effects” were removed, CPI would only be 2.1%. Bear in mind… as I stated a few paragraphs above, CPI has got dozens of gimmicks built into it to HIDE the real inflation levels.
So, we’ve got both the Fed and the White House in complete denial about this problem. Which means…
Inflation is going to rage and rage.
What does this mean for stocks?
I’ll explain all of that in tomorrow’s article.
In the meantime, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.
The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.
We are making just 100 copies available to the public.
To pick up yours, swing by:
Chief Market Strategist
Phoenix Capital Research