The update on the Producer Price Index (PPI) was released this morning. This is hot on the heels of the Consumer Price Index which came in late last week at a new high since 1982.
The PPI by Commodity came in at 131.03 for November 2021 (the data is a month behind). This PPI data point reflects a year-over-year rate of 9.74%. The mountain climb to the moon continues unabated. Compare this to the latest CPI year-over-year rate of 6.9%.
The monthly change compared to last month is 0.83%. At that rate, this equates to a forecasted annualized price inflation of 9.96% (0.83 x 12) from the perspective of producers.
PPI is a measure of prices from the perspective of the producer as opposed to that of the CPI, which is a measure from the perspective of the consumer. A rise is producer’s costs will naturally get passed on to consumers. Hence in looking at the PPI, we get a feel for what we will see on the consumer end down the road.
You know what’s funny, in a dark comedy kind of way? Just prior to the Bolshevik Revolution, Vladimir Lenin wrote a pamphlet titled, The Impending Catastrophe and How to Combat It. It was devoted to establishing the economic platform of the Bolshevik Party. In Lenin’s writing it is clear that he understood that monetary inflation (which every government in the world is engaging in at this moment in history) would wreak havoc upon the people. He wrote,
“This raising of prices involves a new chaotic increase in the issuing of paper money, a further increase in the cost of living, increased financial disorganisation and the approach of financial collapse. Everybody admits that the issuing of paper money constitutes the worst form of compulsory loan, that it most of all affects the conditions of the workers, of the poorest section of the population, and that it is the chief evil engendered by financial disorder.”
Of course, immediately after gaining power at the helm of the printing press, the Bolsheviks inflated the currency to further empower themselves, spreading more destruction and starvation among the plebeians. It was a deliberate strategy attempting to usher in the communist utopian vision of a moneyless economy.