Article Image
IPFS News Link • Federal Reserve

Pick Your Fed Poison: Tanking Markets Or Fatal Inflation?

•, by Matthew Piepenburg

Alas: Pick your poison.

For us, the antidote is as good as gold.

More Inflation Signs
Stocks continue to gyrate nervously as the Fed continues to behave like a cornered animal trying to downplay inflation risks while paradoxically supporting a mega "everything bubble" with pro-inflationary tools.

April's "official" CPI inflation number climbed by 4.2%, the fastest climb since 2008 and 2X the Fed's mandate.

The Fed is claiming that's because because COVID's 2020 deflationary trends made such relative inflationary increases "expected," "temporary," and soon to be "contained."

We've heard those words before…

Meanwhile, US producer prices surged by 6.2% for the same month, the highest move since 2010, as core inflation, which excludes energy and food, saw its highest move since 1981.

As for energy and food, we've already made it painfully clear that prices on everything from ethanol to canola and corn, or from milk, chicken wings and lean pork to beef and coffee are skyrocketing by high double digits.

Thus, in case you think inflation is still up for debate, the facts once again tell us it's already here.

And as for inflation in the risk asset markets, that's now as obvious as any bubble narrative.

The Bubble Narrative: Rates Matter

As for asset bubbles, they are the result of simple cause and effect.

If you want to know why stocks are inflated to levels that would make any bull or bear's nose bleed, the following rate chart tells you why.

History and math confirm that debt drives all bubbles, and when debt is cheap—bubbles expand fatally. Period.

The following interest rate picture, which tracks the cost of debt, says a thousand words as to the power, as well as danger, of cheap debt fueled by the Fed's artificial rate suppression.