Despite Wall Street and the Federal Reserve largely dismissing January’s hotter-than-expected inflation data, the monster that is raising consumer prices will not go away.
Peter Schiff, the noted stockbroker and financial commentator, explained on his podcast that getting inflation under control is not as simple as some believe. It takes much more than a few steep interest rate hikes by the central bank to put the clamps on soaring prices.
Fed Chair Jerome Powell is staking his career on that flawed assumption. As inflation slipped from its historic highs, he was quite willing to use that data to proclaim that the fight was being won.
But, as Schiff correctly noted, this train of thought was based on “wishful thinking.”
The analyst pointed out that “it was not going to be nearly as easy to get that inflation genie back in the bottle as the markets expected. The CPI and PPI data should have thrown cold water on that narrative.”
But the markets shrugged off last week’s bad news from the CPI and PPI, and the NASDAQ actually closed Friday with gains for the week. Further, the trend upward is led by riskier shares, which contradicts expectations if investors are worried about the ever-tightening money supply.
Inflation was 1.4% when Biden took office. It’s now 6.5%. Yet, he lied to America, just like Democrats do and said inflation was high when he took office. pic.twitter.com/QB8IAcAtXN
— Scott Mason (@hypnoksa) February 27, 2023
The Fed as well as the Biden administration keeps parroting the 2% target for inflation to settle into, but that is yet more wishful thinking. And the president is not even being honest when he defends himself from critics who lay the blame for soaring prices at his feet.
Earlier in February, Biden tried to deflect attention away from his abysmal economic record by claiming that inflation “was already there” when he took office.”
Not only was it not there, the rate was a spectacular 1.4% in Jan. 2021.
But that level of denial is typical of what can be expected from Democrats in 2023. As much as the administration preaches of the 2% goal, there have only been 11 years since 1970 when inflation was at 2% or lower.
In fact, eight of the 11 years came after the 2008 financial crisis, when the economy was far from “normal.”
There has been so much money added into circulation in the past few years that inflation was a foregone conclusion. The reality is that getting the genie back in the bottle will require much more belt-tightening in Washington and, unfortunately, by American families.