Core inflation calculations omit food and fuel, the two most important areas for the every day person. They did this to more tightly control the calculated inflation rate because of the massive debt tied to the rate for the banking system. We now live in times where government calculated stats are routinely skewed to support the narrative and prop up the ponzi financial economy regardless of what is happening in everyone’s life.
Deflationary pressures will continue to increase because of automation and lack of work for the masses and increasing wealth redistribution schemes for those that still have a job. At some point, this will derail the ponzi system which is the financial elites greatest fear.
Government spending on things like Social Security has escalators tied to CPI. Even a fraction of an increase has a compounding effect on spending mandates in those program costs enhanced by spending escalators.
The governments of the old communist block used to operate their whole economies that way. And not just the gubmints but everyone, all the way down the ladder was forced to fudge the numbers to fit the central planning. Eventually the house of cards comes down...
I have the impression that way too many folks have bought into to “inflation” scenario, the buy gold etc scenario without consideration of much much bigger factors.
How’s that Gold working out for you?
Virtually every major economy around the world and their central bankers are desperately trying to stop this “deflationary” cycle with the only tool that they have. Lower rates and some form of QE. QE is basically printing money, and while that is without a doubt inflationary and is exactly what these Central Bankers want. The only tool they have to fight deflation is to try and create inflation.
If you consider that the efforts have had the intended effect on some sectors (CPI), and has still been unable to generate the type of capital flows needed in new investments to generate any real economic growth then we are in deep deep trouble.
I’ve posted this many times before, but it’s worth repeating.
Deflation is a Bitch.
It’s like an endless stream of zombies that suck the life from whatever life still exists and you are (the FEDS) and have run out of ammunition, but the zombies still keep coming.
The only thing that can stop this is a REAL technological Breakthrough.
If and when it happens, the money will flood into that technology and all its constituents so fast that it will make your head spin.
If people took a closer look at the economic expansions that have occurred in the western world, they would see a series of “Bubbles”.
Technological breakthrough followed by a flood of money and its over investment followed by recession while the original breakthrough becomes a part of everyday life.
How many PC makers existed in 1987 vs the number today?
How many auto manufacturers existed in the 1920s vs today?
The world is flooded with cash and apparently it’s more concerned with its return OF investment vs. its return ON investment.
There is a reason for this.