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Posted on 07/16/2025 6:15:02 AM PDT by delta7
Core inflation’s mild “only” 2.9% annualized rise is not cause for relief. Government agencies, central banks, and regulators all react to data. The Fed, having held rates steady since May, will now sit on its hands until reports confirm if inflation gets a firm grip. Jerome Powell has come out once more to state that the FOMC would have lowered rates if not for Trump’s tariffs. Trump is in opposition with the Fed as fiscal policy blames monetary policy, and no one opens their eyes to see the underlying problem.
A massive systemic risk looms on the horizon as consumer stress intensifies. Medical services, shelter, apparel, food, and everything else have been significantly more expensive since the pandemic, although the trend began five years ahead of COVID. These structural moving parts are more than mere statistics, as they are a sign of social stability and confidence.
Core inflation rose 0.2% for the month, representing a 2.9% annualized increase. The consumer price index rose by 0.3% in June, bringing the 12-month inflation rate to 2.7%.
I’ve repeatedly warned that the inflationary trend, which has become stagflation, would be blamed on Trump’s policy. “In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs,” Powell said at the European Central Bank forum in Sintra, Portugal.
I’ve said it once, and I will say it again– Prices have simply not returned to what they once were before the global economy came to a standstill during COVID. Every nation has been affected.
The lockdowns and supply chain cracks were exacerbated by a massive increase of government spending. Then the government doubled down on green policies, causing energy prices to rise, and lit the situation ablaze amid the Ukraine war and Russian sanctions. The world was already amid a sovereign debt crisis before COVID, and in fact, the Economic Confidence Model clearly stated that the landscape would permanently change after the Big Bang target of October 1, 2015 (2015.75)—the peak in government confidence.
The Council of Economic Advisers (CEA) has even issued a report that found PCE consistent across core goods, excluding energy, over the past three years. The CEA found “no clear break” in trend despite the headlines. Inflation has been above target for years and the Fed simply cannot control the trend.
Expect a cautious Fed. And expect politicians to blame their opponents, as always, rather than seeking the actual cause. Those politicians merely turn to academics who do not understand how the economy functions at its core and rely on outdated concepts that do not reflect the current landscape. The real culprit is cyclical history repeating itself—trade policy swings, inflationary follow-through, central bank reaction, and then economic slowdown.
Socrates is already flagging this cycle rising. And in 2026, we’ll look back and see that June 2025 was merely the early tremor of a system-wide shift.
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Be aware, even by the Fed’s statistics, the U.S. dollar has lost some twenty percent of it’s purchasing power since the Covid scam and will continue to.
Wholesale Imflation, even.
The 2.5% is a Theft target. The way they talk about 2% or 2.5% is to normalize it, build theft into the system. This is how "magical money computers" can work.
To get zero inflation, need to return to PM-based financial system, and expose and end fractional reserve bankstering.
Problem is, the US has always struggled. Sound money proponents in a financial war with "inflationists", those that prefer Elastic money. The latter has been winning, as now we are almost all fiat.
The Fed is in a rate trap due to the high national debt. They can’t hold rates high for long without causing a huge cost to service the debt, but every time they lower rates they cause a new asset bubble. Our boom/bust cycles are shorter and sharper these days and we are getting to a point where there is no happy medium.
All there is left is to await financial collapse so we can start all over again. Of course, the transition will be hell. I just hope and pray that transition comes after I am dead and buried.
Then there’s this...
U.S. PPI flatlines, undershooting forecasts and signalling potential inflation slowdown
The increase in inflation was .1% more than the projection
Anti tariff panicans are calling this a surge
The decrease in core inflation was .1% below the projection
Car prices actually declined a bit
This is being ignored
Powell may choose to resist Trumps tariff strategy all he chooses ( costing US taxpayers hundreds of billiions in debt refi costs) but Trump’s tariff revenue is rolling into the Treasury at about $120 Billion thus far, with projected double or triple that for this year
and major tariff deals have yet to start. In last week Trump announced deals with Vietnam and Indonesia that tariff their imports into the US while giving America tariff-free markets into their countries.
Indonesia is buying 50 Boeing jets. That’s investment in US manufacturing, and jobs.
Problem is, the US has always struggled
————-
We had little to no inflation prior to Nixon taking the US off the Gold backing of our paper currency….printing trillions of paper currency since then was/ is the death of all monetary systems…..as we are witnessing.
No, wholesale prices were flat this morning compared to an expectation of 0.2% rise month-to-month. This blog post is referring only to yesterday’s data.
Trump just announced that they are putting across the board 10% tariffs on imports from the less developed countries, which is mainly raw materials or food. Maybe some textiles. What does that have to do with reshoring manufacturing or so called “fair trade”? Nothing. But it will cause prices to go up. Trump’s tariff strategy does not make total sense to me.
That's not really a Federal Reserve issue. Debt service is a function of the rates on U.S. Treasury bonds, and those are even more concerning than what Federal Reserve Chairman Powell does or doesn't do with the Federal Funds Rate.
Both 20-year and 30-year U.S. Treasury rates passed the 5% threshold yesterday. If my information is correct, these rates are now higher than they've been at any time since 2007.
A 10% tariff had everything to do with repatriation of manufacturing. Do you understand how tariffs and global economics work? Your ignorance is showing.
Pull up the inflation numbers prior to the 70’s…. Many years ( excluding war time) we had up to - ( minus) 6 percent inflation!….yes, inflation was measured in negative numbers…..something we will never see again.
The cumulative inflation is becoming unbearable. When I think what I could buy for one paper dollar in the 60’s is astounding….we are nearing the “ end game”…
Plenty of inflation to go around prior to Nixon. For instance, greenbacks of Civil War days. The US has had this tug and pull with bankers and their politicians plugging for central banking and inflating the money supply, going back to Jefferson and Hamilton days. Over the 250 years, we've had minor moves towards sound money, but others typically won out. Before Nixon was the FED creation, Jekyll Island, Bretton Woods, the Gold Standard years, the Gold Exchange Standard years. Murray Rothbard of the Mises institute is a great source of info, especially given so much crap that spouts from MSM, TV, movies these days.
All Nixon did was take the existing system where gold was already closed to Americans (thanks to FDR and others), and closed it to foreign central banks as well.
Fact is, there is STILL a financial system tie to gold, in that as gold *seems* to go up, it really is just an indicator that gold, steady all along, is showing the dollar go down. WHEN the system dies, we return to PMs as a matter of course.
“What does that have to do with reshoring manufacturing or so called “fair trade”?”
Tariffs are a tax on foreign producers who have free access to our markets but make no contribution to our markets or economy. If you tax US producers, and don’t tax (i.e. place tariffs on) foreign products coming into our country the foreign producers will always have a significant cost advantage. it is unfair for the US government to tax US producers but not their foreign competitors in our domestic markets.
In addition to subsidizing exports, many foreign countries create barriers to trade for US companies attempting to export to those foreign countries. These barriers include tariffs, inspection fees, customs fees, quotas limiting the amount imported, and regulations on imported goods imposed solely for the purpose of making those foreign goods more expensive. When foreign companies impose these fees and regulations on US products, but the US allows foreign products to enter the US market with no tariffs, fees, quotas or regulatory restrictions, US companies are disadvantaged and trade is unfair.
Trump’s point is he is all for free trade but it must be 100% reciprocal. If a country is putting restrictions, quotas and fees on US imports, we will impose tariffs on that country to equalize the economic playing field.
Recognize also that many of our allies (Europe, Canada, Mexico) are placing stiff tariffs on US imports while at the same time benefiting from low defense expenditures thanks to the US taxpayer shouldering their defense burden. So their imports flow freely into the US, they restrict US exports, and they get a free ride on defense. This economic imbalance is not sustainable and will destroy the US financially.
Factories have a 20-30 year life span so for an investor to build a factory in the US the investor must have a reasonable expectation he/she will receive a reliable stream of income for 20-30 years off that investment. In the 1990’s the globalist policies of the US opened American markets to free and no or low restriction access to foreign countries. We did not demand reciprocity for this generous end to quotas, tariffs and special regulations. The world responded by maintaining restrictions and fees on US goods while taking full advantage of open US markets. As a result US based factories moved offshore and middle class jobs were decimated in the US. It was more profitable for US companies to produce offshore, and import goods back into the US under the open market trade rules than it was to continue producing in the US. Hence today products ranging from appliances, to autos, to apparel, to electronic goods are made offshore instead of by Americans in American factories.
Trump is trying to change, with tariffs on foreign goods, the economic imbalance that penalizes US production and the employment of US workers. It took 30 years to offshore American industry under the globalist trade policies. It will take another 30 years to rebuild American manufacturing. However, before investors will rebuild US supply chains by making long term investments in new factories, they must be certain global cost structure (tariffs, duties, quotas, etc) is equalized and not unfairly tilted against the US.
If you choose to maintain the current imbalanced trade system which is economically tilted against US production, you will see the remaining US factories go offshore, just as John Deere recently sent some of its farm production in the US to Mexico. More middle class jobs will be lost and US trade deficits will increase. You will enjoy your cheap goods today, but future generations of Americans will live in a world in which the US economy is like that of an impoverished third world country and our citizens live the life of people in third world countries.
If you want to rebuild US industry there will be some pain. You will pay more for products. You will pay the tariffs levied on imported foreign goods while US supply chains are being rebuilt. Once the US factories are up and running, if they pay middle class wages you will continue to pay higher prices that you did a year ago when foreign producers, paying workers slave wages, imported with no restrictions or tariffs into the US market.
We’ve been on a 30 year binge of enjoying cheap foreign produced products while the American factories and jobs went away. We are late to realize the cost of the binge must be paid either by rebuilding our industrial infrastructure or declining into a third world low standard of living economy. Choose wisely.
And that is a very good thing because all the chips have been bet and then doubled down again on one of the biggest gambles of our lifetimes: that the United States can grow its way out of a staggering national debt and a choking chronic deficit during a political age in which Congress simply cannot enact meaningful austerity and reduce the deficit. Trump has done what perhaps no one else could have done, he has worked his magic and bought time for the gamble to pay off.
Meanwhile, a rescission bill has made its way through the Senate now goes onto the House, but that is only for a puny $9 billion and the odds-on passage are not certain. So the gamble pretty much remains as it was: that we can climb out of our deficit hole with growth and with virtually no budget cutting.
What's at stake? The bet is existential, our margins have grown so thin due to generations of profligacy that we run the risk of a death spiral. Or, the bond market may stay away from the bidders' window and we simply could not sell the bonds needed to roll over our debts at an interest rate that does not itself bring ruin.
What are the risks to this gamble? Any black Swan. That includes but is not limited to inflation, depression, war, pestilence, world trade embargoes etc. By definition, a black Swan is that which was not and probably could not have been anticipated. History warns us we certainly should anticipate a recurrence of the calamity of Trump's growth trajectory when hit by Covid. Even more to be anticipated, but no less calamitous, would be loss of offices to Democrats.
So we are running an existential gamble, yet one that is probably the most rational way out considering the risks and considering the fecklessness of Congress. Trump deserves credit for this choice. I wish more austerity could have been introduced into the mix but Trump clearly has a realistic appraisal of the state of the politically possible.
We are now in a place where getting rich is not only satisfying but virtuous, it also means salvation.
Trump just announced that they are putting across the board 10% tariffs on imports from the less developed countries, which is mainly raw materials or food.
None of what you said has anything to do with a 10% across the board tariff on less developed countries. They don't export manufactured products to us. As I pointed out.
Also it's across the board, on every country. It has nothing to with whether or not any specific nation is creating barriers to our products.
I ask again, what does that to do with reshoring manufacturing or so called “fair trade”?” It just makes things cost more.
Exter’s famous pyramid……anything other than Gold is Debt.
https://www.schiffgold.com/commentaries/exters-inverted-pyramid-of-risk
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