First Real Estate, Then Oil, Next is Food

The quantity of USDs in circulation has been growing at an accelerating rate since the JFK/LBJ Guns and Butter program. The bill came due when Nixon came along. One option was to cut spending and raise taxes to pay off the debt. Nixon took the other option and closed the gold window giving rise to the PetroDollar.

And so, inflation (the M2 stock) doubled in ~10 years.

Doubling slowed from the Reagan years but continued into the 1990s under Greenspan’s policyes – only slowed when the Republican Congress balanced the Federal Budget.

The Congress under Bush 2.0 and Obama took the M2 from ~$5 trillion (2000) to ~$12 trillion (2016). That’s a 140% raise in 16 years.

Congress under Trump took the M2 from $12 trillion to $18 trillion. Call that ~50% in 4 years on par with the JFK/LBJ spending program.

Congress under the Sock Puppet is already adding debt (and the M2) at the rate of over $2 trillion per year. And between his “COVID relief” legislation, his “infrastructure” plan, and his family plan, thr corrupt Sock Puppet has called for $6 trillion in new federal spending within the first 100 days of his presidency.

Over the last 50 years, the M2 is up ~20X

While the US population is up 2.5.

Any surprise the cost of housing is as high as it is? And accelerating?

Chris Kimble sees oil as the next to spike:

Perhaps Inflationistas Should Be Watching Crude Oil?

inflation correlation to crude oil prices commodities chart image april 28

Commodities prices have risen rather sharply over the past 12-18 months, adding to worries of pricing pressure and inflation.

As you can see in the chart above, businesses are taking note. The word “inflation” is being mentioned at a record rate by S&P 500 companies on earnings calls.

Although there are several inputs that effect consumer prices and inflation, perhaps one major indicator is worth watching right now: Crude Oil.

How crude oil trades directly effects energy prices… and those prices are major inputs for both consumers and businesses. And right now crude oil is trading at an incredibly important “long-term” resistance level.

Since peaking in 2008, crude oil has been trading within a declining price channel (marked by lower highs on the “monthly” chart above). But the past several months have seen crude oil (along with other commodities) surge in price. And this now has oil trading at dual price resistance, marked by its prior two highs as well as the falling downtrend line. While a move lower may keep inflation in check, a breakout move higher would embolden inflationistas and bring worries of higher prices to the fore.

Humbly speaking, I think what crude oil does at (1) will determine if inflation is going to become an issue in the months ahead. Stay tuned!

If the Sock Puppet gets its way with its Climate Action Plan, you can count on high energy costs.

Which means high food costs as well.

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