June 10th, 2021:
Consumer Prices Jump Most Since Lehman 2008:
The U.S. is now firmly down the path Japan took thirty years ago. It's called deflation denial.
They have forgotten that oil went negative last year. Which is the MAIN reason why the CPI is so high this year:
Over one year from the onset of the pandemic and the biggest asset bubble in human history has reached lethal proportions. Valuations are totally meaningless at this point in time. At the best of times Wall Street predictions have the veracity of a profoundly corrupt Magic 8 ball. Now they are ludicrous predictions regarding post-pandemic profitability built on top of the asinine predictions regarding the post-pandemic economy.
The only quasi-objective measurement of valuation is market cap over GDP which has reached suicidal levels that portend years if not decades of negative returns for current holders of stonks at these levels.
The period after the Y2K high is sometimes called "The lost decade". However on an inflation adjusted basis it was a lost 15 years:
Japan has had many false dawns over these past three decades - too many to count. Each one landed them back at the zero interest rate bound.
For those who want a straightforward explanation of inflation versus deflation - here it is:
Deflation is when wages are going up slower than prices. Inflation is when wages are going up faster than prices. Which do you honestly think we are in? Exactly. We are at no risk of hyper-inflation. Back in the 1970s, the economy was at full capacity utilization and private sector unionization was all time high. Now today, both capacity utilization and unionization are at an all time low. There is no cost of living increase at Chipotle.
Under this current paradigm, there is constant downward pressure on wages - from outsourcing, immigration, automation, and now mass unemployment. Worse yet, monetary policy is solely focused on financial markets which is why there is constant hysteria over the slightest inflation. Our entire society is now enslaved to financial markets.
Those who think that prices can't go down have severe amnesia.
For example, they've forgotten that home prices collapsed in 2008:
They don't remember that you can't bid up your own assets.
Although not for lack of trying.
When this super bubble explodes sending the price of everything down at the same time, then this society will finally understand the concept of deflation.
They will panic. Central banks will panic.
But it will be far too late, because confidence in Disney markets will be lost.
Permanently.
And then everyone will be on the same page.
