The latest CPI inflation report is dissected and analyzed, showing US inflation is ‘hot’ and chronic. The report ensures another Fed 75 pts rate hike early November and likely another thereafter. Nonetheless Fed rate hikes will have only partial effect on US inflation, although the Fed’s unprecedented pace and size of interest rate hikes is already having unintended consequences: While it’s impact on US inflation is limited (most US inflation due to supply problems not excess demand), Fed rate hikes are driving global collapse of currencies, recession outside US, as well as pushing capitalist financial system into crisis (watch UK pension funds, EU Credit Suisse bank, and US bond markets’ liquidity crisis).
Listen to my October 14 Alternative Visions Radio Show.
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SHOW ANNOUNCEMENT
Dr. Rasmus discusses the CPI report released this past week and identifies the four sections responsible for the chronic inflation: food, energy, shelter and transport. Why the four will continue to keep inflation high over the winter. Why most of CPI is still supply side driven and not demand. Why Fed escalating rate hikes can address only Demand side causes of the inflation and therefore prices will remain in the 4-5% range despite the deeper recession coming 2023. Rasmus discusses why inflation in Europe is worse than the USA and how Fed rate hikes exacerbate inflation there and elsewhere in the rest of the world. The show concludes with discussion of some of the consequences of the Fed rate hikes (in USA and globally), including why rate hikes (Fed and UK) are contributing to growing financial instability in Britain—which is a case example of what may occur later elsewhere in Europe. Comparisons of the 2008 Lehman Brothers crash with the current emerging financial crisis in Britain.
The response of the Biden administration to inflation is yet another example of the hallmark of Joe Biden’s tenure: intelligent futility. This means that the Democrat oligarchs want a Republican triumph in November since every American who goes to the grocery store or gas station is confronted with yet another of Joe’s appalling economic failures. Finally I don’t get how the Reagan administration got away with 20% plus interest rate hikes without causing a world wide recession but Joe can’t get away much more modest hikes. Has the world economy become that fragile in the intervening decades?
Reblogged this on Calculus of Decay .