Is stagflation here? Some say yes and that the Fed has missed it

(Pixabay)

Economic matters remain in the news with some raising concerns about stagflation:

Stagflation Signals Soar as Manufacturing Surveys Show Skyrocketing Prices

May 2, 2024

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:

“Business conditions stagnated in April, failing to improve for the first time in four months and pointing to a weak start to the second quarter for manufacturers. Order inflows into factories fell for the first time since December, meaning producers had to rely on orders placed in prior months to keep busy. …

Prices charged for goods rose at a slower rate than the 11-month high seen in March. But, as S&P Global notes, the rate of increase nevertheless remains elevated by historical standards – and well above the average seen in the decade prior to the pandemic – as firms continued to pass higher commodity prices on to customers.

However, input costs increased sharply, with the rate of inflation quickening for the second consecutive month. Higher prices for oil and metals were mentioned in particular.

So, stagnating growth and sharply rising input costs… Stagflation signals everywhere. https://oilprice.com/Finance/the-Economy/Stagflation-Signals-Soar-as-Manufacturing-Surveys-Show-Skyrocketing-Prices.html

May 1, 2024

Federal Reserve Chair Jerome Powell said Wednesday there was no sign of stagflation in the economy, even as inflation remains stubbornly high and some signs of slowing growth have started to emerge.

In remarks after the release of the Fed’s decision Wednesday to leave interest rates unchanged, Powell said he didn’t “really understand where talk of a stagflation scenario is coming from” given the preponderance of solid economic data.

Historically, stagflation occurs when high unemployment, slow economic growth and high inflation all happen at the same time. https://www.nbcnews.com/business/economy/stagflation-us-economy-what-is-it-are-we-there-rcna150275

Peter Schiff sent out the following in an email today:

May 2, 2024

In June 2022, when inflation was raging at over 9% in the US, Fed Chairman Jerome Powell admitted to a reporter, “we now understand better how little we understand about inflation.”

“Uh, that’s not very reassuring,” the reporter chuckled.

Talk about an understatement. …

They may not understand where inflation comes from, but they understand the profound effect it’s having on their standard of living. Many people are working harder than ever juggling multiple jobs yet struggle to afford basic necessities they once took for granted.

But the Fed doesn’t understand such realities. Just like politicians with ‘decades of experience’, central bankers live on a completely different planet than the rest of us— a place where out of touch ‘experts’ who are disconnected from the real world come up with idiotic theories that are consistently wrong.

Remember when inflation was supposedly “transitory”? Or when, TWO DAYS before Silicon Valley Bank went bust, the Fed Chairman told Congress that they saw absolutely no consequences from their interest rate hikes?

These people have been wrong at every turn. And the latest episode is stagflation— which the Fed Chairman outright dismissed yesterday afternoon.

“I don’t see the ‘stag’ or the ‘flation’…” the Fed Chairman quipped, seemingly quite pleased at how witty he sounded.

His conclusion is nuts; stagflation is hitting him squarely between the eyes, yet he STILL doesn’t see it.

The ‘stag’ data is everywhere. Even the government’s official numbers on the US economy last week showed GDP growth coming to a screeching halt. New hires are down to the lowest level in EIGHT years, and by some metrics in ELEVEN years. Productivity growth last year was an anemic 1.3%. The list goes on and on.

And the fact that the Fed Chairman doesn’t see the “flation”, i.e. inflation, is just intellectually dishonest. Even the Chairman himself has admitted over the past few weeks that inflation remains too high. Both statements cannot be true at the same time… except in the mind of a central banker.

It’s noteworthy that yesterday the Chairman completely ruled out RAISING interest rates. There will be no rate hikes. Period.

Raising interest rates is what a central bank is supposed to do when facing obvious inflation. But they’ve taken that option off the table, entirely abandoning their responsibility to keep prices under control. …

This is stagflation— a small decline in the standard of living. The economy sputters, prices go up, and wages don’t keep pace.

Yet the Fed doesn’t see it.

They don’t understand stagflation.

They don’t understand inflation.

They don’t understand the catastrophic growth trend of the US national debt.

They don’t understand the risks to the US dollar and the coming loss of its status as the dominant global reserve currency.

And they don’t even understand that they don’t understand. They’re so out of touch that they still believe they have the situation under control.

(Note: I do not have any type of connection with Peter Schiff, other than I sometimes get sent emails.)

Yes, we are in dangerous economic times.

Yes, government leaders do not understand the degree of risk that various spending policies and practices are putting on the USA and its dollar.

What is stagflation?

Here is some information about that:

In economics, stagflation or recession-inflation is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high. It presents a dilemma for economic policy, since actions intended to lower inflation may exacerbate unemployment. …

he term stagflation, a portmanteau of stagnation and inflation, was first coined during a period of inflation and unemployment in the United Kingdom. The United Kingdom experienced an outbreak of inflation in the 1960s and 1970s. Inflation rose in the 1960s and 1970s, UK policy makers failed to recognise the primary role of monetary policy in controlling inflation. Instead, they attempted to use non-monetary policies and devices to respond to the economic crisis. Policy makers also made “inaccurate estimates of the degree of excess demand in the economy, [which] contributed significantly to the outbreak of inflation in the United Kingdom in the 1960s and 1970s.^[3]

Stagflation was not limited to the United Kingdom, however. Economists have shown that stagflation was prevalent among seven major market economies from 1973 to 1982.^[6] After inflation rates began to fall in 1982, economists’ focus shifted from the causes of stagflation to the “determinants of productivity growth and the effects of real wages on the demand for labor” … the government can cause stagflation if it creates policies that harm industry while growing the money supply too quickly. (Stagflation. Wikipedia, accessed 01/14/22)

I remember when stagflation was a concerning factor in the early 1980s.

The World Economic Forum (WEF) posted the following back in September 2022:

The risk of stagflation

“The central banks are still being very clear about their mandate, they are absolutely fixated on bringing inflation back towards their targets, and that is taking priority over the growth dynamics … It is acting as a backstop, and it’s also why having these independent central banks is so important.”

— Guy Miller, Chief Market Strategist and Head of Macroeconomics, Zurich Insurance

Adrian Mock: Thanks, Santi. Got some questions here from some journalists. Andrew Edgecliffe-Johnson from the Financial Times has a couple of questions to put to the panel. Firstly, where do you see the most pronounced risks for stagflation? And secondly, is it the panel’s view that we’re entering a new economic regime in which inflation remains more elevated than in the past, and where we’re subject to more volatile supply chain issues on a sustained basis? So a couple of very big questions there from Andrew at the FT. Guy, do you want to jump in first on stagflation?

Stagflation

Guy Miller: Well, I guess in terms of the region most vulnerable — I would say it is the Eurozone. It is a region that has typically lower trend growth. And as a result of that, it’s always inevitable that that growth dynamic is going to be at risk. And what we’re seeing here is a combination of that slower trend growth, combined of course with this exogenous shock in terms of the energy component.

So I think it’s fairly clear that certainly for probably the coming year that this region is going to fit that definition of stagflation. …

I think the goods sector is going to be running a little bit higher than we’ve seen in the past for various structural reasons around geopolitics and trade. But I think it is going to be more marginal. It’s still going to be around these targets, even if they are slightly more on the higher side rather than the lower side. So, yes, but to a lesser extent, I think to answer the question.

Adrian Monck: And Rima, do you share that view from Guy there on some of those risks?

Rima Bhatia: Yes. I think well, if we talk about inflation first. I think ultimately the central banks are going to have to tolerate a higher level of inflation. I mean, how far can they raise rates before bringing inflation down to that 2%? I mean, I think that’s no longer realistic in today’s world. 09/30/22 https://www.weforum.org/agenda/2022/09/chief-economists-outlook-inflation-recession-sept-2022/

So, the WEF was expecting stagflation as well as higher than 2% inflation rates. Many in the USA, including me, shared that view.

What is happening will not end well for the USA or its dollar.

This debasing of the value of currency (called “dross” anciently), which is what the USA has been doing with its over spending/debt policies, is condemned in the Bible.

4 Take away the dross from silver (Proverbs 25:4a).

22 Your silver has become dross, Your wine mixed with water. (Isaiah 1:22)

25 I will turn My hand against you, And thoroughly purge away your dross, And take away all your alloy. (Isaiah 1:25)

18 “Son of man, the house of Israel has become dross to Me; they are all bronze, tin, iron, and lead, in the midst of a furnace; they have become dross from silver. 19 Therefore thus says the Lord God: ‘Because you have all become dross, therefore behold, I will gather you into the midst of Jerusalem. 20 As men gather silver, bronze, iron, lead, and tin into the midst of a furnace, to blow fire on it, to melt it; so I will gather you in My anger and in My fury, and I will leave you there and melt you. 21 Yes, I will gather you and blow on you with the fire of My wrath, and you shall be melted in its midst. 22 As silver is melted in the midst of a furnace, so shall you be melted in its midst; then you shall know that I, the Lord, have poured out My fury on you.’” (Ezekiel 22:18-22)

Although the Bible warns against using dross and diluting the money supply, many modern ‘experts’ have a different view. The wrong views on economics will lead to economic problems and ultimately the total crash of the dollar of the USA.

The Fed is loath to raise interest rates for two reasons:

That will raise the amount of interest the USA government has to pay on the debt.
That will tend to slow down the economy, which would hurt many people, but also hurt President Biden’s chances for re-election (although the Fed claims to be non-partisan and non-political, it is influenced by political considerations).

The truth is that the USA is setting itself up for massive inflation

Related to inflation, the Continuing Church of God (CCOG) put together the following video:

15:26

Inflation: When Money Fails

Inflation has been higher in 2022 than it has been for decades in the USA, Europe, and many other lands. What are some of the disruptions that inflation can cause? What about hyperinflation affecting places like Venezuela? Did the Book of Haggai predict inflation? Is food price inflation associated with the ride of the third horseman of the Apocalypse? Does sin and government mismanagement cause inflation? Are there physical things one can do about inflation? What about storing food or buying gold? Will gold outlast the USA dollar? Why might some throw their gold in the street as Ezekiel prophesied? What should God’s people do about inflation? What did Jesus teach about food worries? What about seeking the Kingdom of God? Steve Dupuie and Dr. Thiel cover these matters.

Here is a link to our video: Inflation: When Money Fails.

If governments would not have printed up so much debt money for political and other reasons, inflation would not be as much of an issue. But because many have, stagflation looks much more likely.

Slowing down the economy to deal with inflation by raising interest rates causes other problems.

Hyperinflation will hit the USA.

And while we are NOT there yet, its results, including increasing USA debt, will be worse than almost anyone realizes (cf. Habakkuk 2:6-8).

National repentance is needed, but is not expected (Hosea 11:3a, 5b-7)–but you can repent if you respond to God’s calling.

Some items of possibly related interest may include the following:

Might the U.S.A. Be Gone by 2028? Could the USA be gone by the end of 2028 or earlier? There is a tradition attributed to the Hebrew prophet Elijah that humanity had 6,000 years to live before being replaced by God’s Kingdom. There are scriptures, writings in the Talmud, early Christian teachings that support this. Also, even certain Hindu writings support it. Here is a link to a related video: Is the USA prophesied to be destroyed by 2028? In Spanish: Seran los Estados Unidos Destruidos en el 2028?
Is God Calling You? This booklet discusses topics including calling, election, and selection. If God is calling you, how will you respond? Here is are links to related sermons: Christian Election: Is God Calling YOU? and Predestination and Your Selection; here is a message in Spanish: Me Está Llamando Dios Hoy? A short animation is also available: Is God Calling You?
Christian Repentance Do you know what repentance is? Is it really necessary for salvation? Two related sermons about this are also available: Real Repentance and Real Christian Repentance.
The End of US Dollar Dominance Is the USA losing its economic status? What about the petro-gold-yuan? A related video is also available: US Dollar being challenged by Gold-Petro-Yuan.
Who is the King of the West? Why is there no Final End-Time King of the West in Bible Prophecy? Is the United States the King of the West? Here is a version in the Spanish language: ¿Quién es el Rey del Occidente? ¿Por qué no hay un Rey del Occidente en la profecía del tiempo del fin? A related sermon is also available: The Bible, the USA, and the King of the West.
USA in Prophecy: The Strongest Fortresses Can you point to scriptures, like Daniel 11:39, that point to the USA in the 21st century? This article does. Two related sermon are available: Identifying the USA and its Destruction in Prophecy and Do these 7 prophesies point to the end of the USA?
The Plain Truth About Gold in Prophecy. How Should a Christian View Gold? What do economists and the Bible teach about gold? Gold and silver may drop in value. Inflation/deflation? What do Christians need to know about gold?
Is a Great Reset Coming? Klaus Schwab of the World Economic Forum has proposed a societal change that has been basically endorsed by the Vatican and many world leaders. Does the Bible prophesy a major reset? Here is a link to a related video: Will there be a “Great Reset”?
The Gospel of the Kingdom of God This free online pdf booklet has answers many questions people have about the Gospel of the Kingdom of God and explains why it is the solution to the issues the world is facing. Here are links to four related sermons: The Fantastic Gospel of the Kingdom of God!, The World’s False Gospel, The Gospel of the Kingdom: From the New and Old Testaments, and The Kingdom of God is the Solution.
Biden-Harris: Prophecies and Destruction Can the USA survive two full presidential terms? In what ways are Joe Biden and Kamala Harris apocalyptic? This book has hundreds of prophecies and scriptures to provide details. A Kindle version is also available and you do not need an actual Kindle device to read it. Why? Amazon will allow you to download it to almost any device: Please click HERE to download one of Amazon s Free Reader Apps. After you go to your free Kindle reader app (or if you already have one or a Kindle), you can go to: Biden-Harris: Prophecies and Destruction (Kindle) to get the book in seconds.