"Fed's "Favorite" #Inflation Indicator (PCE) Explodes At Fastest Rate Since 1992 As Incomes Crash By Record"
So – let's summarize – prices are rising at their fastest pace in almost 30 years and incomes just plunged by their most ever! We're gonna need more stimmies!"
Plus to above;
Last year, Hirschman Capital noted that since 1821, 98% of sovereigns that hit 130% debt/GDP have defaulted on their sovereign debt.
The US hit 130% late last year.
Simple Conclussion : The Fed can’t go “hawkish” and raise rates without sending markets –and economies–to their knees; by extension, they now have nothing left to “cut” when the current everything bubble implodes.
And that is a real problem.
There are only two ways for sovereigns to default:
Inflation or collapse.
The latter is not an option.
As for a solution, what’s so tragic is that the only option before the Fed is an even bigger problem—current and inevitably more inflation.
That is, if the Fed wants to keep markets (and their job security) breathing, they no longer have the foregoing template of “rate-hike-followed-by-rate-cutting” at their disposal, which means they now have no choice but to dovishly keep rates near the zero-bound indefinitely.
But the only way to keep rates “controlled” and nailed to the floor of time is to purchase otherwise unwanted bonds to keep their prices elevated and hence yields and rates repressed.
Such bond “accommodation,” of course, costs money, and as we already know, the only “money” the Fed has to spend is the kind they create out of thin air– the very kind of money (and policy) which leads to the kind of inflation discussed above—namely, the brutal kind.
As for that fake money, the evidence of the Fed’s desperate (and only) direction is now obvious, as the following M2 money supply makes equally clear.
Fed is so embarrassed by this “printing solution” that they’ve stopped weekly reporting of M2 data, and frankly, since March, have even stopped monthly reporting of the same.
That, of course, is both telling as well as disgraceful… The Fed literally has something to hide, and that never bodes well, does it?
The correlation to central bank balance sheet (i.e., money supply) expansion and rising markets is now beyond dispute.
In short—do you see the correlation and pattern? Do you see how the Fed’s market sausage is made? More importantly, do you now see the Fed’s self-made conundrum?
Given that the Fed bows to the markets not the people, which choice do you think they’ll make?
In other words, expect more money printing and more yield curve control—and hence more money creation, more inflation, and by extension more fiat currency debasement.
More money supply to keep rates monetized simply means more currency debasement and rising inflation.
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