Stagflation is something I have talked about many times. In the past it had been warnings about its oncoming. Lately I have talked about its arrival. Now that we have seen plenty of data, can we all agree it is here already?
It amazes me to see articles saying that inflation is retreating, even while oil, food, and other commodities are setting record highs. All you have to do is visit the pump to see these articles are invalid (my local gas station went up 8 cents just today). So, why do people keep denying reality?
Probably because the Fed is still in denial. And they will likely throw another log on the fire with another rate cut on April 30th. Can you afford it?
Our current monetary policy is breaking down right before our eyes. Confidence is dropping to new lows. Real interest rates are negative and looking at the fragility of our financial system, they are likely to remain that way for a very long time. The current trend echoes that of the late ’70s. How many remember those days?
The Fed has proven they will do everything in their power, and then some, to keep the system running, including devaluing the dollar as much as they can. The dollar is on the fast track to being totally worthless.
How can the system be fixed? Higher inflation is the only way and guess what; it’s already happening. If you read the Fed’s Beige Book released yesterday, stagflation is apparent throughout.
What does that mean to you, the homeowner? Quite simply, since mortgage bonds hate inflation, we can expect higher interest rates on mortgages down the road.
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