What better way to kick-off the first Monetary Current entry than to check in on the state of inflation today. Welcome, friends.
The latest US Personal Consumption Expenditures (PCE) Price Index was released this week. The PCE price index continued to climb, with a 0.4% increase in August, an annual change of 4.3%. The index has been climbing consistently as the establishment insists on the concept of “transitory inflation.” Even the government’s numbers — relatively tame compared to what people are experiencing in the real world — are starting to alarm the establishment.
The Fed and other central banks around the world have ramped-up the printing presses dramatically over the last two years to fund the exorbitance of government. Their constant devaluation of money inevitably results in a general rise in prices of which we cannot escape.
Some within the Fed are finally admitting reality that “transient inflation” —the term mindlessly repeated by establishment pundits — is nonsense. Granted, they will never come right out and say, “we’ve been misleading you this whole time,” but we can at least start to see the shift in talking points.
Philadelphia Federal Reserve Bank President, Patrick Harker, on Oct 1:
"I am in the camp of being more worried that inflation isn't as transient as we think"
Fed Chairman, Jerome Powell, on Sep. 29:
“It’s very difficult to say how big the effects will be in the meantime or how long they last. … It’s also frustrating to see the bottlenecks and supply chain problems not getting better – in fact, at the margins apparently getting a little bit worse. We see that continuing into next year probably, and holding up inflation longer than we had thought.”
But, the Bank of England and European Central Bank are still doubling-down on “transitory.” The BOE governor, Andrew Bailey, on 27 Sep.:
“Our view is that the price pressures will be transient … But, the pressures are very much still with us, and there is still we believe pass-through to retail prices to come, and manufacturers’ output prices are still rising rapidly.”
And ECB President, Christine Lagarde, on Sep. 28:
“The key challenge is to ensure that we do not overreact to transitory supply shocks that have no bearing on the medium term.”
The fact that central banks target a positive rate of inflation as their standard mode of operation (e.g., 2% annually in the US) is evidence enough that the concept of “transitory” is absurd. As long as the Fed and other central banks around the world continue operating on the basis of inflationary policy, there will be inflation.